Question
If the performance of the divisional managers is based on the Return on Investment (ROI) of their divisions based on their divisional margin, and, therefore,
- If the performance of the divisional managers is based on the Return on Investment (ROI) of their divisions based on their divisional margin, and, therefore, their main objective is to maximise their performance in 2021, will they accept this investment (justify your answer calculating the difference in their ROI)?
Assume depreciation is calculated using the straight-line method
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ROI Division A 2021 (without additional investment) =
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ROI Division B 2021 (without additional investment) =
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ROI additional investment 2021 =
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Decision of each Division? Why?
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Accounting Texts and Cases
Authors: Robert Anthony, David Hawkins, Kenneth Merchant
13th edition
1259097129, 978-0073379593, 007337959X, 978-1259097126
