There are two different hotel chains that you have identified as potential investment opportunities. You are looking for a minimum required rate of return of 8 per cent. As a starting point, you have accumulated some basic information to calculate the return on investment and residual income.

Hotel AsterHotel bella

Sales$10 000 000$6 000 000

Net operating income 200 000300 000

Average operating assets 2 000 0003 000 000

Required

Calculate the ROI and residual income for each hotel. Explain the meaning of your calculations.

b) What is meant by environmental costs in organisation and how environmental costs are expended in organisations?