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True or False If the cost of capital is 24% and the division has a ROI...

True or False If the cost of capital is 24% and the division has a ROI of 30%, and funds available to make investments, then the manager should reject a project with a ROI of 27%.

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Top management measures your division's performance by calculating the division's return on investment (ROI), defined as division-operating income divided by division assets. The division has done quite well recently, as its ROI is 30%. The new investment's ROI is only 27% so it will hurt the performance of the division. So, the manager should reject the project.

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