Question

An investment center manager has three potential projects to accept or reject. Return on Investment (ROI) of these three projects is 12%, 15%, and 18%. Residual income of these projects, respectively, is $1,000, $50,000, and $400,000. These projects are not mutually exclusive (meaning all three of the projects could be pursued at once, if the manager desires). Which of the following statements is FALSE?

Answer 1

Answer:

c, b, a.

Explanation:

Important to note that a mutually exclusive is project or event is one that cannot both occur at the same time. Hence, since they are not mutually exclusive, they can thus occur at the same time.

Therefore, the statement "all three of the projects could be pursued at once, if the manager desires" is TRUE.

It is more likely that the manager's choice would be based on the project with the highest Return on investment (ROI) and residual income (meaning $400,000 residual income and 18% ROI project is selected).