Brown Company is an investment center of Southern Corporation and has provided the following financial information:

Operating Income	$10,000
Residual Income	$3,600
Margin	5%
Turnover	2.5

What has Southern set as their minimum required rate of return for its investment centers?

• A.

  8%

• B.

  12.5%

• C.

  6.4%

• D.

  3.6%

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Question 18 of 474 Points

Assume Brown has an investment opportunity that will cost $20,000 and earn a 10% return. What would be Browns ROI if it were to make this investment?

• A. 9%
• B. 11.25%
• C. 13.75%
• D. 12%

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Question 19 of 474 Points

Assume Brown has an investment opportunity that will cost $20,000 and earn a 10% return. What would be Browns Residual Income if it were to make this investment?

• A. $4,000
• B. $1,600
• C. $400
• D. $5,600

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Question 20 of 474 Points

Assume Brown has an investment opportunity that will cost $20,000 and earn a 10% return. If the management of Brown is being evaluated only using either ROI or Residual Income, will Brown accept or reject this investment opportunity?

• A. ROI - Reject; Residual Income - Reject
• B. ROI - Accept; Residual Income - Reject
• C. ROI - Accept; Residual Income - Accept
• D. ROI - Reject; Residual Income - Accept