Identify the four types and provide a unique example (one not in the slides/study guide) of each. For the upcoming year, Dorby, Inc. (which has an 8% required return) is expected to produce $10,000 operating income on $100,000 of invested assets by opening its flagship store. Dorby is considering expanding to a second location, which would require an additional $100,000 investment but would produce $9,000 additional operating income. What is the increase/decrease in return on investment (ROI) if the second location is opened?
What is the increase/decrease in residual income (RI) if the second location is opened?
Why did the two measures go in opposite directions?
Should the second store be opened?