Question
Lou Alabassi is the Northwest Territories Division manager and his performance is evaluated by executive management based on Division ROI. The current controllable margin for
Lou Alabassi is the Northwest Territories Division manager and his performance is evaluated by executive management based on Division ROI. The current controllable margin for Northwest Territories Division is $ 46900. Its current operating assets total $ 210200. The division is considering purchasing equipment for $ 39600 at the beginning of the year that will increase sales by an estimated $ 9400, with annual depreciation of $ 9700. If the equipment is purchased, what will happen to the return on investment for the division? The company uses total operating assets as the denominator for calculating ROI.
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