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Michael Cianci,manager of Division C of the FX Corporation,is considering a new investment for his division.The division currently has an investment base of $4,000,000,and operating income of approximately $600,000 per year.The new investment of $500,000 supports corporate strategy and is expected to increase operating income by $50,000 next year,an acceptable level of return from the standpoint of the corporation as a whole.
Required:
1.What is the current return on investment (ROI)for Division C?
2.What will be the ROI of the division if the new investment is undertaken?
3.Suppose the manager's compensation consists of a salary plus a bonus proportional to divisional ROI.Would the manager's compensation higher with or without the new investment?
4.Suggest changes to corporate management that will better align performance evaluation and compensation with corporate goals.
Major Depression
A disorder involving disturbances in emotion (excessive sadness), behavior (loss of interest in one’s usual activities), cognition (thoughts of hopelessness), and body function (fatigue and loss of appetite).
FDA
The Food and Drug Administration, a federal agency responsible for protecting public health by ensuring the safety of food, drugs, and medical devices.
ADHD
Attention Deficit Hyperactivity Disorder, a neurodevelopmental disorder characterized by inattention, hyperactivity, and impulsivity.
Controlled Trials
Experimental studies in which participants are randomly assigned to a treatment or control group to measure the effect of interventions.
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