Business, 05.05.2020 00:37 hanahspeers

ABC Broadcasting Company is comprised of two divisions: Music and News. A summary of expected operations in 2019 for each division and the total corporation follows:

Music News Total
Sales $ 800,000 $1,200,000 $2,000,000
Expenses $ 700,000 $ 900,000 $1,600,000
Total assets $1,000,000 $ 2,000,000 $3,000,000

A new project has just been identified that could be purchased and put in place by 2020. The required investment in assets is $500,000 and it would generate net income of $70,000 in 2020. This project is an investment that is available to managers of either the Music or News Division. The company has a target rate return of 12%.

Who would be in favor of investing in the new project assuming that the divisions are organized as investment centers and their performance is evaluated on the basis of residual income?

Music Manager News Manager

Group of answer choices

A. no yes

B. yes yes

C. yes no

D. no no

Answers: 3

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ABC Broadcasting Company is comprised of two divisions: Music and News. A summary of expected operat...

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