Selected data for three investment centers of creatures Inc., a manufacturer of benches, are given below for the previous operating period:

	Water	Sun	Sand
Sales Revenue	$60,000	$100,000	$80,000
Capital	$10,000	$50,000	$20,000
Operating Income	$1,600	$9,000	$1,800

An investment opportunity has been identified that will yield a 17% return on investment for each center. The companys minimum acceptable rate of return is 15%.

Which of the following statements is incorrect?

A.

If each manager is paid a bonus based solely on his ability to exceed the divisions prior period ROI, then two of the managers will accept the opportunity.

B.

If each manager is paid a bonus based solely on his ability to exceed the divisions prior period ROI, Suns manager would make a decision that is in the companys best interest.

C.

Waters manager is the most effective in terms of generating sales revenue from invested capital.

D.

Sands ROI is less than the companys hurdle rate.

E.

If residual income is used to award bonuses, the managers of all three centers will accept the investment opportunity.