Question
You work as a manager in one of STELLAR Inc.'s SBUs that specializes in 3D animation films. Your division has a USD 2,530,000 investment and
You work as a manager in one of STELLAR Inc.'s SBUs that specializes in 3D animation films. Your division has a USD 2,530,000 investment and a net income of USD 410,000.
Your division's top management is contemplating two company expansion alternatives for the coming year. The expansion has the potential to raise your net income by USD 213,200, resulting in a USD 770,000 rise in the value of your investment. The second alternative would result in a USD 146,000 rise in net income and a USD 1,055,000 increase in investment.
Your compensation is calculated as follows: a base salary plus a bonus based on the division's ROI.
- What is current ROI for your division?
- Which one would you opt for among the three alternatives: keep the status quo? The first option of business expansion? The second option of business expansion? Justify your answer with calculations.
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