Question
Emily Adams is the manager of City Wide Door, a company specializing in installing and maintaining garage doors of many types. Her associate, Alyssa, has
Emily Adams is the manager of City Wide Door, a company specializing in installing and maintaining garage doors of many types. Her associate, Alyssa, has provided Emily with three proposals for different investments in machinery to help expand the business. The minimum required return on investments for City Wide Door is 18 percent.
| Proposal A | Proposal B | Proposal C | |||||||||
| Initial investment | $ | 70,000 | $ | 84,000 | $ | 60,000 | |||||
| Annual operating return | 15,400 | 20,160 | 15,000 | ||||||||
a-1. Calculate the ROI for each proposal?
a-2. If Emily uses ROI to evaluate investments, which proposal would be most profitable for the firm?
b-1. Calculate the residual income for each proposal?
b-2. If Emily uses residual income to evaluate investments, which proposal would be most profitable for the firm?
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Monitoring And Auditing Practices For Effective Compliance
Authors: John E. Steiner
2nd Edition
0977843017, 978-0977843015
