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The Mesa Corporation had net operating income of $380,000 and average operating assets of $2,000,000. The corporation's minimum required return on new projects is 18%.

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The Mesa Corporation had net operating income of $380,000 and average operating assets of $2,000,000. The corporation's minimum required return on new projects is 18%. The U.S. Division of the corporation is considering an investment of $70,000 in a project that will generate a net income of $15,000. The U.S. Division currently earns a return on investment rate of 20%. The US division manager can be evaluated based on either the division's ROI (return on investment) or the division's RI (residual income). Which of the following is true? A The US Division manager would invest in the new project only if the division's ROI is used for evaluating the division manager. B The US Division manager would invest in the new project only if the division's RJ is used for evaluating the division manager. C The US Division manager would always invest in the new project whether the division's ROI or RI is used for evaluating the division manager. D The US Division manager would never invest in the new project whether the division's ROI or RI is used for evaluating the division manager

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