Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 11 - Performance Measurement in Decentralized Organizations - The Foundational 15 - Required - Page 499: 10

Answer

ROI for this year = 0.25 (Q6) ROI from last year = 0.32 (Q3) since ROI from this year is lower than last year, she would not pursue the investment

Work Step by Step

return on investment = 0.15 x $120 000 = $18 000 NOI = $30 000 (as calculated earlier) since NOI is larger than RoR, the owners will want to pursue the investment
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