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Division A Division B Division C Average invested capital $3,000 $7,000 $5,000 $600 $560 $800 14% 10% 16% Profit Discount rate 1. Compute ROI

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Division A Division B Division C Average invested capital $3,000 $7,000 $5,000 $600 $560 $800 14% 10% 16% Profit Discount rate 1. Compute ROI and residual income for each division. 2. Each division has an investment opportunity with a 15% ROI. Which manager(s) should invest in the opportunity if each manager is paid based on her division's: a) Profit? b) ROI? c) RI?

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