Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 1,500,000 $ 1,000,000 Operating Income $ 600,000 $ 450,000 Investment $ 4,000,000 $ 2,750,000 If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an ROI of 15%, what will the units likely decide? Multiple Choice Division P will not invest; Division Q will invest. Division P will invest; Division Q will not invest. Neither unit will invest in the projects. Division P will be indifferent; Division Q will not invest. Division P will invest; Division Q will be indifferent.
Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 1,500,000 $ 1,000,000 Operating Income $ 600,000 $ 450,000 Investment $ 4,000,000 $ 2,750,000 If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an ROI of 15%, what will the units likely decide? Multiple Choice Division P will not invest; Division Q will invest. Division P will invest; Division Q will not invest. Neither unit will invest in the projects. Division P will be indifferent; Division Q will not invest. Division P will invest; Division Q will be indifferent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q7
Consider the following data from two divisions of a company, P and Q:
| Divisional | P | Q |
|---|---|---|
| Sales | $ 1,500,000 | $ 1,000,000 |
| Operating Income | $ 600,000 | $ 450,000 |
| Investment | $ 4,000,000 | $ 2,750,000 |
If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an
Multiple Choice
-
Division P will not invest; Division Q will invest.
-
Division P will invest; Division Q will not invest.
-
Neither unit will invest in the projects.
-
Division P will be indifferent; Division Q will not invest.
-
Division P will invest; Division Q will be indifferent.
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