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6. The manager of the East Division of Global, Inc. controls ( $ 10,000,000 ) of capital invested in operating assets, and is currently generating

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6. The manager of the East Division of Global, Inc. controls \\( \\$ 10,000,000 \\) of capital invested in operating assets, and is currently generating \\( \\$ 2,400,000 \\) of operating income. Global Inc.'s minimum required rate of return (i.e., desired return on investment) is \15. The East Division is: currently considering a new investment in operating assets that will cost \\( \\$ 5,000,000 \\) and generate \\( \\$ 1,000,000 \\) operating income. Required: a) Calculate the Division ROI BEFORE and AFTER the new investment is included (round to fouf decimal places, \XtimestimesX ). (ROI before: \24 after: \22.67 ) b) Calculate the Division Residual Income BEFORE and AFTER the Investment. (RI before: \\( \\$ 900,000 ; R 1 \\) after: \\( \\$ 1,150,000) \\) c) Will Global Inc, want the East Division to accept the investment? Why? (YES. The new investment's ROI is greater than the Company's minimum required rate of return.) d) Which measure, ROI or RI, will align the East Division manager's best interests with the Company's? Why? (RI. RI provides incentives for the Division Manager to accept the new investment, which is consistent with the Company's best interests.)

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