When Using Residual Income as a Project-Screening Tool,management Should Accept

question 34

Multiple Choice

When using residual income as a project-screening tool,management should accept a project if the residual income is:

• A) positive.
• B) negative.
• C) equals the ROI.
• D) greater than net income.

---

Definitions:

Inferior Goods

Goods for which demand decreases as the income of the consumer increases, inversely related to that of 'normal goods'.

Quantity Demanded

The sum total of a good or service consumers are ready and able to buy at a certain price point.

Movement Along

Describes the change in quantity demanded or supplied of a good in response to a change in price, as shown on a graph.

Demand Curve

Graphical representation showing how the quantity demanded of a commodity varies with changes in its price.