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5. The Silver Spoon reported the following performance information for their three divisions. East Division Residual Income $200,000 Return on Investment 15% Minimum Required
5. The Silver Spoon reported the following performance information for their three divisions. East Division Residual Income $200,000 Return on Investment 15% Minimum Required Rate of Return 10% Central Division $250,000 West Division $150,000 14% 11% 12% 9% a. Assume that each division is presented with an investment opportunity that would yield a rate of return of 12%. If performance is being measured solely by return on investment, will the East Division accept or reject the opportunity? b. Assume that each division is presented with an investment opportunity that would yield a rate of return of 12%. If performance is being measured solely by residual income, will the East Division accept or reject the opportunity?
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