The following information pertains to a segment of the Marian Company.Invested capital is defined as total assets.The weighted average cost of capital is 10%.The ROI of the segment before the project is 20%.The ROI of the segment after the project is 18%.The manager is evaluated based on the segment's economic profit.A project earning a ROI of 12% should be ________.
A) accepted
B) rejected
C) compared to the company's ROI
D) compared to the company's residual income

Question

Quizplus · Accepted Answer

The project should be accepted because its ROI of 12% is higher than the company's weighted average cost of capital (WACC) of 10%. This means the project is expected to generate returns above the company's cost of capital, contributing positively to the company's economic profit.

The Following Information Pertains to a Segment of the Marian