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  3. department income totals $500,000, investment in t

Department income totals $500,000, investment in the department is $4,500,000, and the company's cost of...

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Accounting

Department income totals $500,000, investment in the department is $4,500,000, and the company's cost of capital is 9%.

a) Calculate the return on investment (ROI).

b) Calculate economic value added.

c) Assume there is a capital project that requires a $400,000 investment for a $37,000 return. Would the department manager be more likely to accept the project if department performance was evaluated using ROI or economic value added? Why?

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