Edith Carolina is president of the Deed Corporation. The company is decentralize

Question

Edith Carolina is president of the Deed Corporation. The company is decentralized, and leaves investment decisions up to the discrétion of the division managers. Michael Sanders, manager of the Cosmetics Division, has had a return on investment of 14% for his ch is on the past three years and expects the division to have the same return in the coming year. Sanders has the opportunity to invest n a new line of cosmetics which is expected to have a return on investment of 12%. The company's minimum required rate of return is 8% Suppose Deed Corporation evaluates managerial performance using return on investment. Edith Carolina, as president of the company, may view the opportunity for taking on the cosmetics line differently from Michael Sanders, manager of the Cosmetics Division. What action would each of them prefer with respect to the decision of whether to take on the new cosmetics line? A) B) c) D) Carolina accept reject accept reject Sanders reject accept accept reject Multiple Choice Choice A TOSHIBA

Explanation / Answer

Carolina accept as ROI is greater than 8% Sanders reject as ROI is less than 14% Choice A is correct

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