Consider the Following Data from Two Divisions of a Company

question 92

Multiple Choice

Consider the following data from two divisions of a company, P and Q:
$\begin{array}{lrrrr}\text { Divisional } &{\mathrm{P}} & \mathrm{Q} \\\text { Sales } & \$ 1,500,000 & \$ 1,000,000 \\\text { Operating Income } & \$ 600,000 & \$ 450,000 \\\text { Investment } & \$ 4,000,000 & \$ 2,750,000\end{array}$ 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?

• A) Division P will invest; Division Q will not invest.
• B) Division P will invest; Division Q will be indifferent.
• C) Division P will not invest; Division Q will invest.
• D) Division P will be indifferent; Division Q will not invest.
• E) Neither unit will invest in the projects.

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Definitions:

Induce

To persuade or lead someone to carry out a certain action or behavior.

Receipt

A written acknowledgment that something of value has been transferred from one party to another.

Presumed

Accepted as true or existing until proven otherwise; an assumption based on general experience.

Acceptance

In contract law, the act of agreeing to the terms of an offer, thereby creating a binding contract.