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Asked by Regan Mc Mullan on May 17, 2024

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If the Deed Corporation evaluates managerial performance using residual income based on the corporate minimum required rate of return of 8%, what decision would be preferred by Edith Carolina and Michael Sanders? If the Deed Corporation evaluates managerial performance using residual income based on the corporate minimum required rate of return of 8%, what decision would be preferred by Edith Carolina and Michael Sanders?

Managerial Performance

Assessment of the effectiveness and efficiency of managers in achieving business objectives, often evaluated through financial and non-financial metrics.

Residual Income

The income that exceeds the required return on investment or minimum acceptable rate of return set by management.

Corporate Minimum Required Rate of Return

The lowest acceptable rate of return on an investment that a corporation deems sufficient for its operations and growth.

  • Identify how managerial choices influence performance indicators within divisions.
  • Determine and clarify the minimal essential rate of return.
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Candace WilliamsMay 22, 2024
Final Answer :
C
Explanation :
From the perspective of the company, Carolina would want to accept the project because its return on investment exceeds the minimum required rate of return.From the perspective of the Cosmetics Division, Sanders would also want to accept the project because its return on investment exceeds the minimum required rate of return and hence the residual income will increase.
Reference: CH10-Ref14
Dacker Products is a division of a major corporation.The following data are for the most recent year of operations: From the perspective of the company, Carolina would want to accept the project because its return on investment exceeds the minimum required rate of return.From the perspective of the Cosmetics Division, Sanders would also want to accept the project because its return on investment exceeds the minimum required rate of return and hence the residual income will increase. Reference: CH10-Ref14 Dacker Products is a division of a major corporation.The following data are for the most recent year of operations:

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