Calculating the divisions return on investment roi defined


Top management measures your division's performance by calculating the division's return on investment (ROI), defined as division operating income divided by division assets. Your division has done quite well recently; its ROI 30 percent. You the division should invest in a new production process, but a colleague disagrees, pointing out that because the new investment's first-year ROI is only 25 percent, it will hurt performance. How would you respond?

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Financial Management: Calculating the divisions return on investment roi defined
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