Familia Inc

question 14

Essay

Familia Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 13%.
Required:
1.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
2.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
3.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)
4.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

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Definitions:

Physiological Psychology

A subfield of psychology that studies the relationship between physiological processes and behavior.

Group Test

An assessment given to multiple participants at once, facilitating the evaluation of many individuals simultaneously.

Ability

The possession of the means or skill to do something or perform a task effectively.

Mental Test

An assessment designed to evaluate cognitive, perceptual, and intellectual abilities, often used in psychological and educational settings.