Decision would also be in the stockholders best interest

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Kim is a dvisional manager at General Rotors. Her compensation is based on the division's net income and she plans to retire in a year. Kim's division uses a major piece of machinery which keeps breaking down, causing delays until it is fixed. Kim is considering two choices (a) Fix the machine at a cost of $4 million (10 year life, no salvage value, straight line depreciation) OR (b) keep fixing the machine with a repairs expense of $300,000 per year. Which decision is in Kim's best interest? Explain. Explain next whether this decision would also be in the stockholders' best interest and why or why not.

Reference no: EM131447417

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