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matmandeep Gilf: Attempt 1 Question 4 (2 points) Two divisions have the following information available: Division 1 Division 2 Minimum required rate of return 11%
matmandeep Gilf: Attempt 1 Question 4 (2 points) Two divisions have the following information available: Division 1 Division 2 Minimum required rate of return 11% 10% Current return on investment 13% 15% The manager of each division has an opportunity to invest in assets that will yield a rate of return of 12%. Required: 1. If performance is measured by return on investment (ROI), which division(s) will probably accept the opportunity? Explain why. (1 mark) 2. If performance is measured by residual income (RI), which division(s) will probably accept the opportunity? Explain why. (1 mark)
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