Herb Huskie currently has an ROI of 16%, average operating assets of $1,500,000 and NOI of $240,000. The minimum required rate of return is 10%. Huskie can make an investment of $250,000 for a new project that would generate a NOI of $30,000. Using residual income, would Huskie make this investment?
a) Yes, the new project would have a ROI of 12%. b) Yes, the new project would have a ROI of 16%. c) No, the new project would have a ROI of 12%. d) No, the new project would have a ROI of 16%.
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