Q1) Eastern Division of Taxes Chemical Co. made the following operating results for previous year:
| Sales |
$10,000,000 |
| Segment income |
1,500,000 |
| Assets |
6,000,000 |
Eastern Division is considering a $1,000,000 investment in new project. Eastern Division estimates that its return on investment (for all its operations) would be at 22% with new investment.
Refer to Eastern Division. How much net segment income is new project expected to produce?
Refer to Eastern Division. If manager of the Eastern Division is estimated on return on investment alone, will manager invest in new project? Describe.