Question: Consider the information in Brief Exercise 25.5. Assume that the manager of Division 1 has the opportunity to purchase a new piece of equipment for

Consider the information in Brief Exercise 25.5. Assume that the manager of Division 1 has the opportunity to purchase a new piece of equipment for $1,000,000 that would increase earnings by $130,000 per year. Show the impact of this purchase on Division 1's ROI. Would the manager of Division 1 undertake the investment? Why or why not?
Brief Exercise 25.5

Division 1 Division 2 Earnings Investment base $ 750,000 2,000,000 5,000,000 20,000,000 . -

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