The new department reported $11,250 net operating income with $75,000 average operating assets this year. The department has a new investment opportunity that would increase net operating income by $4,375 with $35,000 additional investment.

Q) What will be true given that the company's minimum required rate of return is 10%?

Multiple Choice

• If the division is evaluated on the basis of Residual income, the manager of the office product division would not accept the new investment because it is bad for the company.

• If the division is evaluated on the basis of ROI, the manager of the office product division would accept the new investment because it is good for the division.

• Regardless of whether the division is evaluated on the basis of ROI or Residual income, the manager will not accept the new investment because it is bad for the company.

• If the division is evaluated on the basis of Residual income, the manager of the office product division would accept the new investment because it is good for the division.

• If the division is evaluated on the basis of ROI, the manager of the office product division would not accept the new investment because it is bad for the company.