The Pip division has the following operating data:
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Operating assets
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$200,000
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Operating income
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$ 50,000
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Minimum required rate of return
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16%
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1. Compute the ROI and RI for this division.
2. Assume that the Pip division is presented with an investment project yielding a 20 percent return on its investment requiring a cash outlay of $30,000. Would the manager of the Pip division accept this investment under the ROI approach? How about under the RI approach?