Everton Ltd manufactures a range of sports equipment. It evaluates its' divisions based on their Return on Investment (ROI). The three top managers in each division receive a bonus of $10,000 for every percentage point that their division exceeds the group target of 15%. Currently, the Goodison division is on target to make a return of 18% this year. The manager of this division (Mr Ancellotti) is evaluating a investment proposal estimated to return 17%.

The Goodison divisions' Chief Financial Officer, Mr. Richarlison, advises to undertake the investment as it should return in excess of the group target of 15%.

However the third top manager, Operations manager Mr. Coleman says "Don't undertake the investment as it will lower our divisional ROI to under the currently projected 18% and therefore lower our bonuses."

What should Mr. Ancellotti do?

Would his decision be different if a Residual Income (RI) measure was adopted instead?