Izzy's Information Technology (IIT), a technology distributor, is looking to expand from its local Alberta operation. IIT's proprietor, Isabel Jensen, has been presented with three possible investment scenarios: Investment A: Enter into an arrangement with an American technology accessories distributor to set up retail locations to market both IIT's products and the accessories together. The investment would cost $245,000, and annual earnings are anticipated to be $28,000. Investment B: Partner with a British Columbia technology manufacturer to produce technology under a joint venture. The investment would cost $525,000, and annual earnings are anticipated to be $58,000. Investment C: Invest in a technology factory in Bolivia that is being sold by an insolvent technology manufacturer. The investment would cost $750,000, and annual earnings are anticipated to be $115,000. As proprietor, Isabel is responsible for the investment decisions of IIT. Isabel has NO experience operating and selling technology outside of Alberta. Isabel aims to achieve a return of 13% on new projects. Isabel is looking for guidance on which investment to make, if any. She has financing available for any one of the options and is NOT interested in starting more than one new investment at a time. Required:

a) Explain how return on investment (ROI) and residual income are used to determine whether to proceed with an investment.

b) Using ROI, recommend to Isabel which investment she should make.

c) Using residual income, recommend to Isabel which investment she should make.

d) Based on the responses to (b) and (c), provide two additional factors Isabel should consider in making this investment decision.

Provide an overall recommendation on whether Isabel should move forward with the investment.