Perry Corporation Is Composed of Three Operating Divisions $\text {\underline{Division A } }$

question 186

Multiple Choice

Perry Corporation is composed of three operating divisions.Overall,the Perry Corporation has a return on investment of 20%.Division A has a return on investment of 25%.If Perry Corporation.evaluates its managers on the basis of return on investment,how would the Division A manager and the Perry Corporation president react to a new investment that has an estimated return on investment of 23%?
$\text {\underline{Division A } }$                         $\text {\underline{Perry Corporation President } }$
$\text {\underline{Manager } }$

• A)accept accept
• B)accept reject
• C)reject accept
• D)reject reject

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Definitions:

Agency Costs

are expenditures or losses incurred from the conflict of interest between principals (owners/shareholders) and agents (managers).

Imperfections

Flaws, faults, or defects that prevent something from being perfect or completely correct.

Agency Costs

Expenses that arise from conflicts of interest between principals (such as shareholders) and agents (such as managers) within a corporation.

Spot Checks

Random inspections or audits conducted without prior notice to ensure compliance or verify the quality of ongoing activities.