Question
Company A is a divisionalized organization, where all its division managers are responsible for making all division decisions and the manager is responsible for those
Company A is a divisionalized organization, where all its division managers are responsible for making all division decisions and the manager is responsible for those decisions made. Division X current return of investment (ROI) is 28%. Division X is presented with the following investment opportunities: Projects A B C Revenue $180,000 $600,000 $140,000 Operating costs $100,000 $480,000 $ 90,000 Asset Investment $200,000 $500,000 $200,000 Company A minimum required rate of return is 18% which is equal to the Company A average cost of capital. 8. If you were the division manager and you were evaluated based on ROI, which projects would you accept? If you were the corporate finance director which projects would you accept?
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