Attley Inc.has three separate divisions: Division A,Division B,and Division C.Information about the three divisions follows:
The company has recently implemented a new performance evaluation system.Based on this new system,a division manager would only receive a bonus if the ROI of the division was greater than 25% and residual income was in excess of $20,000.If management uses a cost of capital rate of 18%,which division manager(s) would be eligible for a bonus?
Definitions:
Opportunity Cost
The value of the best alternative that is forgone in making any choice or decision.
Terms of Trade
The ratio between a country's export prices and its import prices, indicating the quantity of imports goods a country can purchase through the sale of its exports.
Supply and Demand
Fundamental economic model describing how prices vary as a result of a balance between product availability and consumers' purchasing desires.
Opportunity Cost
The financial loss associated with rejecting the subsequent preferable choice when deciding or selecting amongst various options.
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