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A company has three divisions, each of which is an investment centre. The divisional managers' performance is assessed using return on investment (ROI). A higher ROI will result in a higher bonus for the divisional manager.
The company's cost of capital is 15%.
For the forthcoming year each divisional manager has one investment opportunity available as follows:
The manager(s) of which division(s) will proceed with their respective investment opportunity?
Suggested Answer: A, B
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34 comments · newest first
MA
Mabel
11 months ago
Division 2's investment seems risky with that cost of capital.
LE
Lenita
11 months ago
Division 1 looks solid too, don’t count them out!
EL
Elenor
11 months ago
Wait, are we sure about that? What if the risks are too high?
JE
Jennifer
12 months ago
Totally agree, Division 3 is the clear choice!
KA
Kati
12 months ago
Division 3 has the highest ROI opportunity.
SA
Sang
1 year ago
I think Division 2 has a decent ROI, but I’m not confident if it’s above 15%. I feel like I need to double-check the calculations for all divisions.
PH
Phillip
1 year ago
I’m a bit confused about how to determine which divisions would proceed. I remember something about only accepting investments with ROI above the cost of capital.
AN
An
1 year ago
I’m not entirely sure, but I think we had a similar question in practice where we had to evaluate multiple divisions. I feel like Division 1 might also be a contender.
TA
Tayna
1 year ago
I remember we discussed how to calculate ROI and compare it to the cost of capital. I think Division 3 might be the only one that meets the criteria.
CH
Charolette
1 year ago
Okay, I think I've got this. I'll calculate the ROI for each division and see which ones exceed the 15% cost of capital. Those are the ones that should proceed with their investments to maximize the divisional managers' bonuses.
DO
Dorathy
1 year ago
Hmm, I'm a bit confused by the different investment opportunities and how they relate to the divisional managers' performance. I'll need to carefully review the information and make sure I understand the key factors before attempting to answer.
KI
Kimbery
1 year ago
This seems like a straightforward question about investment decisions based on ROI. I'll need to calculate the ROI for each division and compare it to the company's cost of capital to determine which ones should proceed.
WH
Whitley
1 year ago
This is a tricky one. I'll need to consider not just the ROI, but also how the divisional managers' incentives might influence their decisions. I'll have to think carefully about the bigger picture here.
OL
Olive
1 year ago
Okay, I've got this. The correct answer is clearly C - APP authentication. That's a common mobile app-based authentication method. I'm confident I can get this one right.
TH
Thaddeus
1 year ago
Hmm, this seems like a tricky one. I'll need to think through the network security group configuration carefully to make sure I'm allowing access to the right storage account.
MY
Myra
1 year ago
Okay, I've got this. WSUS is a Microsoft tool for centrally managing Windows updates across an organization. So the correct answer has to be D - Windows updates for workstations and servers.
SE
Selma
1 year ago
I bet the other divisions are kicking themselves for not coming up with a better investment opportunity. Gotta step up your game, guys!
TI
Timothy
1 year ago
Division 3 only will proceed with their respective investment opportunity.
AN
Annamaria
1 year ago
Division 2 and Division 3 will proceed with their respective investment opportunity.
JU
Judy
1 year ago
Division 1 and Division 3 will proceed with their respective investment opportunity.
SH
Sherita
1 year ago
Ha! Division 3 must have one heck of a manager. 'Division 3 only' is the way to go, my friends.
FR
Francene
1 year ago
I agree, Karan. And based on the information provided, it looks like Division 3's investment is the only one that meets that criteria.
LI
Lindsey
1 year ago
User C
KA
Kallie
1 year ago
User B
KA
Kayleigh
1 year ago
User A
KA
Karan
2 years ago
Okay, let me think this through. If the cost of capital is 15%, then any investment with an ROI higher than that should be pursued, right?
LE
Leota
1 year ago
I agree, Division 1 and Division 3 have ROIs higher than the cost of capital.
LE
Leota
1 year ago
Yes, that's correct. Division 1 and Division 3 should proceed with their investment opportunities.
FL
Floyd
2 years ago
Hmm, this seems like a tricky one. The key is to focus on the ROI and the company's cost of capital.
JA
Jaime
1 year ago
Yes, Division 1 and Division 3 would be the best choices based on ROI and the company's cost of capital.
WI
Winfred
1 year ago
Division 1 and Division 3 have the highest ROI, so they should proceed.
VA
Van
2 years ago
I disagree. Division 2 and Division 3 have higher ROI than Division 1. They should proceed with their investment opportunity.
MA
Maryann
2 years ago
I agree with Mollie. Division 1 and Division 3 have the highest ROI, so they should proceed.
MO
Mollie
2 years ago
I think Division 1 and Division 3 will proceed with their investment opportunity.