Division a Had ROI of 15% Last Year

question 89

Multiple Choice

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

• A) Accept the investment as long as it provides positive operating income.
• B) Accept the investment as long as its ROI is positive.
• C) Reject the investment if it returns more than 15% ROI.
• D) Reject the investment if it returns less than 15% ROI.
• E) Reject the investment if it returns an ROI equal to 15%.

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Definitions:

Excess Capacity

The amount of production capability that is not being used by a firm or within an economy.

Excess Capacity

Refers to the situation where a firm is producing at a lower scale of output than it has been designed for.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for competitive pricing and differentiation.

Advertising

A means of communication with the users of a product or service, aimed at promoting or selling a product, service, or idea.