Tomorine is the manager of a successful division at large Fortune 50 company. Tomorine has one the highest ROI's of all the managers in the company at 47%. Tomorine has achieved this stellar performance by closely monitoring both the sales, product margins, and assets invested in their division. Current performance bonuses are based on ROI's and with the highest performance, Tomorine's are some of the highest in the company. Recently, a new progressive CEO has been hired. The new CEO proposes that beginning next year, the company will gradually shift away from ROI has the measure to award bouses and will instead use Residual Income. Tomorine currently has several proposals under consideration for new invetments in their division. Look over these opportunities and evalaute each for Tomorine using both ROI and Residual Income. Assume that the company uses an 18% cost of capital in evaluating all new projects. Sales Net Income Assets Cost of Cap ROI RI Current 5,000 3290 7000 0.18 47% 2030 Project A 100 50 200 .18 Project B 80 30 95 .18 Project C 250 90 300 018

Tomorine is the manager of a successful division at large Fortune 50 company. Tomorine has one the highest ROI's of all the managers in the company at 47%. Tomorine has achieved this stellar performance by closely monitoring both the sales, product margins, and assets invested in their division. Current performance bonuses are based on ROI's and with the highest performance, Tomorine's are some of the highest in the company. Recently, a new progressive CEO has been hired. The new CEO proposes that beginning next year, the company will gradually shift away from ROI has the measure to award bouses and will instead use Residual Income. Tomorine currently has several proposals under consideration for new invetments in their division. Look over these opportunities and evalaute each for Tomorine using both ROI and Residual Income. Assume that the company uses an 18% cost of capital in evaluating all new projects