Paxton Electronics Company paid $7 million in cash 5 years ago to acquire a company that manufactures CD-ROM drives. This company has been operated as a division of Paxton and has lost $600,000 each year since its acquisition. The minimum desired return for this division is that, when a new product is fully developed, it should return a net profit of $600,000 per year for the foreseeable future. Recently, the MKS Corporation offered to purchase the division from Paxton for $6 million. The president of Paxton commented, "I've got an investment of $10 million to recoup ($7 million plus losses of $600,000 for each of 5 years). I have finally got this situation turned around, so I oppose selling the division now." Requirement 1. Prepare a response to the president's remarks. Indicate how to make this decision. Be as specific as possible. . . . The $10 million is for decision purposes. The company must consider whether to invest $ million in the division or invest it elsewhere. If projects or divisions of comparable risk can be expected to generate more than $ yearly, the division should beThe $1 million is q for decision purposes. The company must consider whether to invest $E| million in the division or invest it elsewhere. if projects or divisions oi compa acted to generate more than 5 yearly, the division should he T irrelevant relevant The $10 million is for decision purposes. The company must consider whether to invest $ million in the division or invest it elsewhere. If projects or divisions of comparable risk can be expected to generate more than $ yearly, the division should be held. sold