An investment opportunity with a residual income that equals or exceeds the company's required rate of return should be accepted.
Answer the following statement true (T) or false (F)
False
If a manager's evaluation is based on residual income, the manager is likely to accept a project when the additional investment would increase the manager's residual income. In this situation, the investment opportunity is expected to earn a ROI that is equal to or greater than the company's required rate of return. However, this conclusion is based solely on quantitative results. In real-world practice, companies also consider qualitative factors. In addition, there may be other competing investment opportunities that could generate even higher residual values.
You might also like to view...
Lenders are interested in the value of operating assets as collateral when making lending decisions
a. True b. False Indicate whether the statement is true or false
Starforce Avionics makes aircraft instrumentation. Its basic navigation radio requires $80 in variable costs and $5000 per month in fixed costs. Further processing the radio, to enhance its functionality, will require an additional $28 per unit of variable costs but no change to the fixed costs. The marketing manager believes that the company would be able to increase the sales price from $290 to $310. If Starforce decides to further process the product, operating income would ________.
A) remain the same B) increase by $28 per unit C) increase by $108 per unit D) decrease by $8 per unit
One way to report revenue earned by a company is to present it by the different segments of business
Indicate whether the statement is true or false
When marketing people do long-range planning and the whole company is guided by the "marketing concept," the company has entered the ________ era.
A. production B. consumerism C. customer satisfaction D. marketing company E. marketing department