If a Large Diversified Company Has Many Different Divisions, Each

question 68

Multiple Choice

If a large diversified company has many different divisions, each competing for capital expenditure funds, which of the following statements would be MOST relevant?

• A) The division with the lowest assets should have priority for investment funds to allow that division to grow to the scale of the other divisions.
• B) The division with the highest operating income should take priority, because it will likely continue to earn the highest operating income for the company.
• C) The division with the highest ROI should take priority because it shows that it can produce the highest return per invested dollar.
• D) The division with the highest growth rate in assets should be given additional funding.

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