Edith Carolina, president of the Deed Corporation, requires a minimum return on investment of Fact Pattern:8% for any project to be undertaken by her company. The company is decentralized, and leaves investment long as the 8% return is expected to be realized. decisions up to the discretion of the division managers asMichael Sanders, manager of the Cosmetics Division, has had a return on investment of 14% for his division has the for the past 3 years and expects the division to have the same return in the coming year. Sanders .opportunity to invest in a new line of cosmetics that is expected to have a return on investment of 12%
If the Deed Corporation evaluates managerial performance using residual income based on the corporate minimum required rate of return, what will be the preference for taking on the proposed cosmetics line by Edith Carolina and Michael Sanders?
Carolina ....Sanders