Question: Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows: DivisionsSalesOperating AssetsOperating IncomeWestern Division$ 1 8 0

Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows:
DivisionsSalesOperating AssetsOperating IncomeWestern Division$ 180,000$ 130,000$ 18,000Eastern Division$ 330,000$ 180,000$ 19,500
Kelfour has an additional $53,000 of funds to invest. The manager of the Western Division believes that she can invest the funds at a rate of return (ROI) of 15.50% while the manager of the Eastern Division has found a new investment opportunity that is expected to yield a 13.50% ROI. Kelfour uses residual income (RI) to evaluate managerial performance. The company wide desired ROI is 11.50%. Based on this information
Multiple Choice
The manager of the Western Division would accept the $53,000 additional investment opportunity because it would increase the Division's RI by $2,120.
The manager of the Eastern Division would accept the $53,000 additional investment opportunity because it would increase the Division's RI by $2,120.
The CEO would be indifferent because the $53,000 additional investment would increase the RI of the company as a whole regardless of which Division receives the additional investment.
All of the answers represent true statements.

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