Exercise 3 D.Parton Co is a large integrated conglomerate with shipping, metals ane t world. The general manager of the ferrous metals budget for 201X for inclusion in the countrywide budget. divisions has been directed to submit his proposed capital The division manager has for All projects have equal risk. consideration the following projects, all of which require an outlay of capital Project Investment required Return (n US S) (US S) 6,000.000 2.400,000 1,750,000 1,200,000 800,000 350,000 1,380,000 768,000 245,000 216,000 160,000 98,000 The division manager must decide which of the projects to take. The company has a cost of capital of 15%. An amount of S 15 million is available to the division for investment purposes. Questions 1) What would be the total investment, total return on capital invested and the residual income of the division manager if a. The company has a rule that all projects promising at least 20 % ROI or more should be taken b. The division manager is evaluated on his ability to maximize his return on capital invested (assume that this is a new division with no invested capital) The division manager is expected to maximize residual income as computed by using the 1 5% cost of capital c 2) Which of the three approuches will induce the most effective investment policy for the company as a whole