Question 17

Yuqing Enterprise has a return on investment of 15 per cent. One of the enterprise's divisions, which currently has a return on investment of 13 per cent and $375,000 of residual income, is contemplating a large investment that will (1) reduce divisional return on investment and (2) produce residual income of $60,000. If Yuqing strives for goal congruence, the investment ___________.

	a.	should be approved because, after acquisition, the division's return on investment and residual income are both positive numbers
	b.	should not be approved because it reduces divisional return on investment
	c.	None of the answers.
	d.	should not be approved because the division's return on investment is less than the corporate return on investment before the investment is considered
	e.	should be approved because it produces a positive residual income for the division