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Does agri-products chief operating officer want the vertical

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Reference no: EM132972616

Agri-Products is currently generating an overall ROI of 14.5% across all of its divisions. The Vertical Farming Division has the opportunity to invest $1 million in an expansion to their facility in Hull QC. The investment would increase operating income by $175,000 and current liabilities by $160,000.

Problem 1. Would the VP, Vertical Farming want to accept the investment opportunity if he were evaluated by his division ROI? Explain why.

Problem 2. If she is evaluated based on ROI, does Agri-Products Chief Operating Officer want the Vertical Farming Division to accept the investment opportunity? Explain why.

Problem 3. What action would you take if you were the Chief Operating Officer in this situation? Identify the benefits and risks.

Problem 4. Would your answers to parts a or b change if Agi-Products used Residual Income to evaluate the performance of its divisions? Explain why.

Reference no: EM132972616

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