Flamengo Co is a sporting goods manufacturing. The Basketball Division so far this year has the following performance numbers: Basketball Division Operating $76 mil Income Operating Assets $627 mil The basketball division has the opportunity to invest in two projects for the coming year. The investment required and the returns are as follows: Project 1 $11 mil Project 11 $18 mil Investment Operating Income $1.2 mil $1.7 mil The division has the approval to request up to $30 million in new investment capital. Corporate HQ requires that all investments earn at least 10%. Any capital not used by a division is invested by HQ earning the minimum rate of return. Question: Thinking about the profitability of the company as a whole, what would be the manager's optimal decision? To invest in both projects To invest in Project I only To invest in Project I only To invest in neither projects Flamengo Co is a sporting goods manufacturing. The Basketball Division so far this year has the following performance numbers: Basketball Division Operating Income $76 mil Operating Assets $627 mil The basketball division has the opportunity to invest in two projects for the coming year. The investment required and the returns are as follows: Project 1 Project II Investment $11 mil $18 mil Operating $1.2 mil $1.7 mil Income The division has the approval to request up to $30 million in new investment capital. Corporate HQ requires that all investments earn at least 10%. Any capital not used by a division is invested by HQ earning the minimum rate of return. Question: What would be the ROI of the department after the manager made a decision based only on the profitability of the basketball department? O 12.12% 12.15% 12.03% O 12.10% 12.05% Flamengo Co is a sporting goods manufacturing. The Basketball Division so far this year has the following performance numbers: Basketball Division $76 mil Operating Income Operating Assets $627 mil The basketball division has the opportunity to invest in two projects for the coming year. The investment required and the returns are as follows: Project 1 $11 mil Project II $18 mil Investment Operating Income $1.2 mil $1.7 mil The division has the approval to request up to $30 million in new investment capital. Corporate HQ requires that all investments earn at least 10%. Any capital not used by a division is invested by HQ earning the minimum rate of return. Question: What would be the ROI of the department after the manager made a decision based on the profitability of Flamengo Co.? 12.12% 12.15% 12.10% 12.03% O 12.05% Flamengo Co is a sporting goods manufacturing. The Basketball Division so far this year has the following performance numbers: Basketball Division $76 mil Operating Income Operating Assets $627 mil The basketball division has the opportunity to invest in two projects for the coming year. The investment required and the returns are as follows: Project 1 $11 mil Project II $18 mil Investment Operating Income $1.2 mil $1.7 mil The division has the approval to request up to $30 million in new investment capital. Corporate HQ requires that all investments earn at least 10%. Any capital not used by a division is invested by HQ earning the minimum rate of return. Question: How much the company would lose in dollars if the manager focuses only on divisional profitability
