The Magellan Division of Global Corporation, Which Has Income of $250,000

question 6

Multiple Choice

The Magellan Division of Global Corporation, which has income of $250,000 and an asset investment of $1,562,500, is studying an investment opportunity that will cost $450,000 and yield a profit of $67,500. Assuming that Global uses an imputed interest charge of 14%, would the investment be attractive to:
1-Divisional management if ROI is used to evaluate divisional performance?
2-Divisional management if residual income (RI) is used to evaluate divisional performance?
3-The management of Global Corporation? $\begin{array}{llll}&\text { Attractive to } & \text { Attractive to } & \text { Attractive } \\&\text { Magellan: ROI } & \text { Magellan: RI } & \text { to Global }\\\hline\text { A. } & \text { Yes } & \text { Yes } & \text { Yes } \\\text { B. } & \text { Yes } & \text { No } & \text { No } \\\text { C. } & \text { Yes } & \text { No } & \text { Yes } \\\text { D. } & \text { No } & \text { Yes } & \text { Yes } \\\text { E. } & \text { No } & \text { Yes } & \text { No }\end{array}$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D
• E) Choice E

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Definitions:

Cognitive Stimulation

Activities and exercises designed to improve mental abilities such as memory, reasoning, and problem-solving skills.

Menopause

The natural cessation of menstruation that typically occurs in a woman’s late 40s to early 50s, marking the end of the reproductive years.

Menarche

The first menstrual cycle, or first menstrual bleeding, in female humans; marks the possibility of fertility.

Ovulation

Ovulation is the phase in a female's menstrual cycle where a mature egg is released from the ovary, enabling fertilization if sperm is present.