Business, 05.05.2020 09:27, Jadaaaaaaan
As indicated in the chapter, return on investment (ROI) is well entrenched in business practice. However, its use can have negative incentive effects on managerial behavior. For example, assume you are the manager of an investment center and that your annual bonus is a function of achieved ROI for your division. You have the opportunity to invest in a project that would cost $550,000 and that would increase annual operating income of your division by $50,000. (This level of return is considered acceptable from top management’s standpoint.) Currently, your division generates annual operating profits of approximately $625,000, on an asset base (i. e., level of investment) of $4,150,000.
Required:
1. What is the current return on investment (ROI) being realized by your division (i. e., before considering the new investment)?
2. What would happen to the near-term ROI of your division after adding the effect of the new investment?
3. As manager of this division, given your incentive compensation plan, would you be motivated to make the new investment?
Answers: 3
Business, 22.06.2019 18:00, theflash077
Large public water and sewer companies often become monopolies because they benefit from although the company faces high start-up costs, the firm experiences average production costs as it expands and adds more customers. smaller competitors would experience average costs and would be less
Answers: 1
Business, 22.06.2019 19:20, josh200508
Advertisers are usually very conscious of their audience. choose an issue of a popular magazine such as time, sports illustrated, vanity fair, rolling stone, or the like. from that issue select three advertisements to analyze. try to determine the audience being appealed to in each advertisement and analyze the appeals used to persuade buyers. how might the appeals differ is the ads were designed to persuade a different audience.
Answers: 2
As indicated in the chapter, return on investment (ROI) is well entrenched in business practice. How...
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