If a new project generates a positive residual income,the
A)project's return on investment is less than the target rate.
B)project's return on investment is greater than the target rate.
C)project's return on investment is equal to the target rate.
D)relationship between the project's return on investment and the target rate cannot necessarily be determined.

Question

Quizplus · Accepted Answer

A positive residual income means that the project is generating more income than its expenses and the target rate of return. Therefore, the project's return on investment must be greater than the target rate to generate positive residual income.

If a New Project Generates a Positive Residual Income,the