Question
Shelley Company has 2 investment centers - Division A and Division B. The Current ROI for Division A is 13% and the Minimum required return
Shelley Company has 2 investment centers - Division A and Division B. The Current ROI for Division A is 13% and the Minimum required return is 16%. The Current ROI for Division B is 20% and the Minimum required return is 12%. A new product line can be manufactured by either Division A or Division B. The new product line will have a projected ROI of 14% according to the best estimates . Shelley Company will only allow one division to produce the new project .
If both divisions managers have their performance evaluated using ROI then
Both divisions will ask Prime Manufacturers to let them produce the new product .
Only Division A will ask Prime Manufacturers to let them produce the new product .
Only Division B will ask Prime Manufacturers to let them produce the new product .
Neither division will ask Prime Manufacturers to let them produce the new product .
None of the above .
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