EKPN Company is currently generating an ROI of 10%. The Winnipeg division of EKPN is operating as an investment centre. It is currently generating an ROI of 13% based on $130,000 in operating assets and a controllable margin of $16,900. The manager of the Winnipeg division has an opportunity to invest in an asset that will cost $30,000 and generate a controllable margin of $3,600.

Instructions

a) Would it be in the Winnipeg managers best interest to make the investment? (2 marks)

b) Would it be in EKPNs best interest to make the investment? (2 marks)