Consider the following data for evegreen inc operating, Ask an Expert

Finance

Consider the following data for EveGreen, Inc., :

Operating income $2,000,000

Average invested assets 6,000,000

ROI 33.33%

Assumed EveGreen, Inc. uses a hurdle rate of 10% compute the division’s residual income.

Required:

(1) If the performance of the division manager is evaluated based on the division ROI and the division manager acts in personal interest, will the division manager accept the proposed project?

(2) The division manager is considering a proposed project with 25% ROI. If the performance of the division manager is evaluated based on the residual income and the division manager acts in personal interest, will the division manager accept the proposed project?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92781657

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