An investment center of Southwick Corporation made three investment proposals.

Measuring Performance: Details of the proposals follow.

Southwick Corporation uses the residual income method to evaluate all investment proposals. Its minimum rate of return is 15 percent.
1. As president of Southwick Corporation, which of the investments, if any, would you make? Why?
2. Assuming that Southwick Corporation uses the ROI approach to evaluate investment proposals, which investments, if any, would you make? (Southwick Corporation's current return on assets is 20 percent.)

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Required investment Annual return. Proposals 1 2 3 $80,000 13,000 $50,000 $65,000 9,000 9,500