Question
Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows: Divisions Sales Operating Assets Operating Income Western
Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows:
Divisions | Sales | Operating Assets | Operating Income |
Western Division | $ 150,000 | $ 100,000 | $ 15,000 |
Eastern Division | $ 300,000 | $ 150,000 | $ 16,500 |
Kelfour has an additional $50,000 of funds to invest. The manager of the Western Division believes that she can invest the funds at a rate of return (ROI) of 14% while the manager of the Eastern Division has found a new investment opportunity that is expected to yield a 12% ROI. Kelfour uses residual income (RI) to evaluate managerial performance. The company wide desired ROI is 10%. Based on this information
d. All of the answers represent true statements. |
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