Magna Products has three divisions, A, B, and C. The current investments in and net profits earned by each division are as follows:

Each division has put forward to the parent board a capital expenditure proposal for \($50\) Each expects to produce net profits of \($40,000\) from that investment. Magna’ cost of capital is 7%
per year.
Use ROI and RI calculations to

a. Evaluate the current performance of each division.

b. Evaluate which proposal the board should approve if finance limits the decision to a single proposal.

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Division A Investment $1,000,000 Net profit Division B $75,000 Investment $1,500,000 Net profit Division C $90,000 Investment $2,000,000 Net profit $150,000