The following information pertains to Wolfe Company

-If invested capital is defined as total assets, a project earning an ROI of 12 percent should be
A) accepted.
B) rejected.
C) rejected if the cost of capital is greater than 12 percent.
D) rejected if the desired rate of return is less than 12 percent.

Question

The following information pertains to Wolfe Company
 
-If invested capital is defined as total assets, a project earning an ROI of 12 percent should be
A) accepted. 
B) rejected. 
C) rejected if the cost of capital is greater than 12 percent. 
D) rejected if the desired rate of return is less than 12 percent.

Quizplus · Accepted Answer

A project should be rejected if the cost of capital is greater than the ROI, as it would not cover the cost of financing the investment.

The Following Information Pertains to Wolfe Company