Question
The following additional investment opportunities are available to an investment center manager: Project Initial Investment Annual Earnings A $800,000 $130,000 B 100,000 20,000 C 300,000
The following additional investment opportunities are available to an investment center manager:
| Project | Initial Investment | Annual Earnings |
| A | $800,000 | $130,000 |
| B | 100,000 | 20,000 |
| C | 300,000 | 25,000 |
| D | 400,000 | 68,000 |
The investment center manager is currently making a return on investment (ROI) of 16 percent. Assume annual earnings are before finance charges, and the manager is evaluated on ROI (return on investment). The cost of capital for the firm is 11%.
Assuming economic rationality, and the availability of adequate funds, the manager will select:
- A. None of the four projects
- B. Projects A, B, and D
- C. Project B
- D. Projects B and D
- E. All the four projects
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PFIN
Authors: Randall Billingsley , Lawrence J. Gitman, Michael D. Joehnk
6th Edition
1337117005,1337516694
