Ge Yang's firm relies heavily on year-over-year improvements in ROI to evaluate performance. Ge projects ROI of 26% this year, comfortably above last year's actual ROI of 24%. She has the opportunity to make an investment that exceeds her firm's criteria for payback and NPV. This project will increase her average assets for this year by $50,000 to $350,000. This investment will, however, only contribute $5,000 to this year's profit.
Required:
a. What is Ge's projected ROI if she invests in the project?
b. Why might Ge be reluctant to invest in the project?