Division a Is Considering a Project That Will Earn a Rate

Division A is considering a project that will earn a rate of return that is greater than the required return on operating assets, but less than the division's ROI. Division B is considering a project that will earn a rate of return that is greater than the division's ROI, but less than the required return on operating assets. If the objective is to maximise residual income, would these divisions accept or reject their projects.
$\begin{array}{cc} \text { Division A}& \text {Division } B\\\end{array}$
A. $\begin{array}{cc} \text {Accept}& \text { Accept}\end{array}$
B. $\begin{array}{cc} \text {Reject}& \text { Accept}\end{array}$
C. $\begin{array}{cc} \text {Reject }& \text {Reject}\end{array}$
D. $\begin{array}{cc} \text {Accept}& \text { Reject}\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Correct Answer:

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