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Big Burger, a national chain selling Gourmet Hamburgers has two (2) out of its 50 stores: North side and South side - growing rapidly. Both

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Big Burger, a national chain selling Gourmet Hamburgers has two (2) out of its 50 stores: North side and South side - growing rapidly. Both are considering expanding their menus to include pizza. The following information has been generated: North side South side on menu Gross Book value of Current Investment: $820,000 $1,320,000 After-tax operating profit $205,000 $244,000 Additional investment for adding pizza $180,000 $180,000 I Additional after-tax income $50,000 $60,000 from addition of pizza The company's required rate of return is 20%, which reflects its cost of borrowing money. (Hint: You may want to consider evaluating two alternatives - with (Pizza) and without (status quo) for each division.) If divisional performance were based on Residual income (RI) using gross book value as the investment base which of the two divisions is most likely to add pizza to their menu

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