The following new investment opportunities are available to an investment center manager:
Project Average Op. Assets Annual Op. Income
I $1,600,000 $180,000
II 200,000 40,000
III 600,000 50,000
IV 800,000 120,000
a. If the investment manager is currently making an ROI of 15%, which project(s) would the manager want to pursue?
b. If the required rate of return by the company is 10%, which project(s) could be chosen?
c. If only one project can be chosen, which project should be chosen to receive maximum benefit from the company's point of view? Explain.
If only one project can be chosen, which project would be chosen by the investment center manager? Would that choice be in the best interest of the company? Explain.