An Organization's Required Rate of Return Is 13

question 119

Multiple Choice

An organization's required rate of return is 13%. The ROI of Divisions A and B, respectively, is 10% and 15%. Each Division is considering a project that will have a 12% rate of return. If residual income is used to evaluate divisions, which of the following statements is true?

• A) Both divisions will accept the project
• B) Both divisions will reject the project
• C) Division A will accept, and Division B will reject, the project
• D) Division A will reject, and Division B will accept, the project