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Wendy Byrd is president of the Ozark Corporation. The company is decentralized, and leaves investment decisions up to the discretion of the division managers. Rachel,
Wendy Byrd is president of the Ozark Corporation. The company is decentralized, and leaves investment decisions up to the discretion of the division managers. Rachel, manager of the Blue Cat Lodge, has had a return on investment of 14% for her division for the last year and expects the division to have the same return in the coming year. Rachel has the opportunity to invest in a new beer dispensing machine which costs $500,000 and is expected to generate a return on investment of 12%. The company's minimum required rate of return is 8%. Suppose the Ozark Corporation evaluates managerial performance using return on investment (ROI). What action would each of them prefer with respect to the decision of whether to purchase the new beer dispensing machine? A) B) C) D) President Byrd Manager Rachel Accept Reject Reject Accept Accept Accept Reject Reject Choice A Choice C Choice D Choice B
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