Return on Investment Michelle Gutierrez, manager of the Components Division of FX Corp, is considering a new investment for her division. Her division has an investment base of $4,000000 and operating income of $600,000. The new investment of $500,000 supports corporate strategy and is expected to increase operating income by $50,000 next year, an acceptable level of return from a corporate headquarters point of view.

a.) What is the current return on investment (ROI) for the components division?

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b.) What will the (ROI) be if Michelle undertakes the new investment?

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c.) Suppose Michelles compensation consists of a salary plus a bonus proportional to her divisions ROI. Is Michelles new compensation higher with or without the new investment?

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d.) Suggest changes to FX Corporations management that will better align performance evaluation and compensation with corporate goals.