Beverly Company has two divisions: Division A and Division B.

Managers of both divisions have decision-making rights and responsibilities for long-term investment decisions.

The following represents operating results for each of the divisions for FY 2021:

		Division A		Division B
Revenues		$25,000		$14,000
Variable Costs		$12,500		$6,000
Fixed Costs		$9,000		$2,000
Net assets (i.e.,investment)		$30,000		$30,600

Suppose that at the beginning of 2022, the Division A manager and Division B manager are considering an opportunity that requires a $4,000 investment to earn $600 in additional income.

The two division managers can each make an investment in this opportunity separately and independently of one another.

The firm has estimated its cost of capital at 12%.

The CEO of Beverly Company recalls the following:

Two important performance measures reflect the effective and efficient use of assets (i.e., investments). One of these measures potentially creates the "underinvestment problem." The other of these measures helps reduce/eliminate the underinvestment problem.

Financial Performance - 1 - Required

Given the above information related to Beverly Company, select the following statements that are true. (Check all that apply.)

A The Division A manager would exhibit the underinvestment problem.

B The Division A manager would NOT exhibit the underinvestment problem.

C The Division B manager would exhibit the underinvestment problem.

D The Division B manager would NOT exhibit the underinvestment problem.

Required

Using the information about Beverly Company above, calculate the value of the performance measure that helps reduce/eliminate a potential underinvestment problem for Division B. (Note: Answer this question regardless of whether the underinvestment problem actually occurs.)

Note: Only enter numerals in the textbox and round to the nearest whole number. You need not include the denomination (%, $, etc.).