a. Yes, because of the above-average ROI of 18%, I could afford to invest $40,000 more than $200,000 and still earn a 15% ROI—which is the rate I’d expect to earn from an investment in this type of business.  The excess earnings offered by this investment = ($200,000 * 18%) - ($200,000 * 15%) = $36,000 - $30,000 = $6,000 per yearon a $200,000 investment.  At an ROI of 15%, an investment of $240,000 would be required to earn $36,000 of income, so $240,000 is the maximum price I’d be willing to pay for the business.