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Paula Boothe, president of the Indigo Corporation, has mandated a minimum 9% return on investment...

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Accounting

Paula Boothe, president of the Indigo Corporation, has mandated a minimum 9% return on investment for any project undertaken by the company. Given the companys decentralization, Paula leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return of at least 11%. The Energy Drinks division, under the direction of manager Martin Koch, has achieved a 17% return on investment for the past three years. This year is not expected to be different from the past three. Koch has just received a proposal to invest $3,000,000 in a new line of energy drinks that is expected to generate $390,000 in operating income.

image Calculate the return on investment expected on the new line of energy drinks. (Round answer to 1 decimal place, e.g. 5.1\%.) Return on Investment % eTextbook and Media Attempts: 0 of 3 used (b) If Martin Koch is evaluated based on the division's return on investment, will he choose to invest in the new line? eTextbook and Media Attempts: 0 of 3 used (c) Would Paula Boothe prefer that Martin Koch invest in the new line

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