Divisional Performance 20 Marks Question 3 Study the scenario and complete the questions that follow: Cost Cutter Ltd Cost Cutter Ltd has two divisions, Impala and Kudu. Each division has its own revenue and costs streams. Impala and Kudu has their own independent managers that can make their own investment decisions within their division. The weighted cost of capital for the two divisions is 15%. In the past, investment decisions were made using the return on investment (ROI) of any opportunities and at present, the return on investment of each division is 19%. Mr Mashaka, a new appointed Impala manager has advocated the use of residual income (RI) to make investment decisions which lead to a better goal congruent throughout the company. Each division is currently considering the following separate investments: Capital required for investment Sales generated by investment Net profit margin Project for Impala Division Project for Kudu Division R124 200 000 R60 900 000 R66 900 000 R32 700 000 31% 36% The management seek to maximise the wealth of the shareholders. Source: Hunde, T. (2020) Required: Calculate both the return on investment and residual income of the new investment for each of the two divisions. Comment on these results, taking into consideration the manager's views about residual income. (20 Marks)