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Discuss manager of the western division is likely to reject

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Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows:

Divisions Sales   Operating Assets   Operating Income  
  Western Division $  150,000     $  100,000   $  15,000  
  Eastern Division $  300,000   $  150,000   $  16,500  

Kelfour has an additional $50,000 of funds to invest. The manager of the Western Division believes that she can invest the funds at a rate of return (ROI) of 14% while the manager of the Eastern Division has found a new investment opportunity that is expected to yield a 12% ROI. Currently Kelfour uses ROI as the sole measure of managerial performance. Based on this information

The manager of the Western division is likely to reject an offer to have the funds invested her department.

The manager of the Eastern division is likely to accept an offer to have the funds invested his department.

The CEO of Kelfour is likely to favor having the funds invested in the Western Division.

Reference no: EM131752897

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