ROI and Residual Income (10 points)

The following investment opportunities are available to an investment center manager:

Project	Initial Investment	Annual Earnings
A	$600,000	$80,000
B	200,000	20,000
C	300,000	20,000
D	400,000	60,000

If the investment manager is currently making a return on investment of 16 percent, which project(s) would the manager want to pursue using ROI as the benchmark?

If the investment manager is currently making a return on investme11t of 1O percent, which project ct(s) would

the manager wants to pursue using ROJ us the benchmark?

Suppose only one project can be chosen. Which project should be chosen if the benchmark criteria is changed so that residual income is the only criteria used (using a benchmark of 10 percent)?