Final answer:
Accepting a project that generates a higher rate of return than the firm's cost of capital will increase the firm's ROI.
Step-by-step explanation:
If a project promises to generate a higher rate of return than the firm's cost of capital, accepting the project will increase ROI(Return on Investment). This is because the ROI measures the efficiency of an investment or compares the efficiency of a number of different investments. By undertaking projects that offer a higher rate of return than the cost of capital, the firm is effectively generating more income per unit of capital invested, thus boosting its ROI.
Comparing with the provided context: if the Gizmo Company invests in new household gadgets and the projects generate a return of at least 6% for the company (which with the additional social benefit becomes at least an 11% return for society), and assuming the company's cost of capital is below this rate, then the ROI would increase as a result of these profitable investments.
If a project promises to generate a higher rate of return than the firm's cost of capital, accepting the project will increase ROI (Return on Investment).