Question: QUESTION THREE - PERFORMANCE MANAGEMENT (10 Marks) [20 MINUTES) Mega Company is considering setting up a new division with an estimated divisional profit margin of

QUESTION THREE - PERFORMANCE MANAGEMENT (10 Marks) [20 MINUTES) Mega Company

QUESTION THREE - PERFORMANCE MANAGEMENT (10 Marks) [20 MINUTES) Mega Company is considering setting up a new division with an estimated divisional profit margin of $250,000 and a divisional investment of $1,000,000. The required rate of return for Mega Company is 16%. REQUIRED: Based on Residual Income, should Mega Company go ahead with its plan? Explain

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