The correct answers are: Its use may discourage investment in new or replacement assets; It is misleading if used to compare departments with different levels of risk; It is misleading if used to compare departments with assets of different ages.

Its use may act as a disincentive to invest in new or replacement assets (because assets age and their Net Book Value falls and so ROI increases).

It is misleading if used to compare departments with different levels of risk. (Here RI is preferred because the rate used in the calculation can be changed to reflect the level of risk.)

It is misleading if used to compare departments with assets of different ages (because as explained above, old assets increase ROI).

The figures needed to calculate ROI are easily available from financial accounting records.