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06.05.2021 • 
Business

Foods Enterprise is a multi-division company. The current ROI for Foods Enterprise as a whole is 11%, and Foods Enterprise has a minimum required rate of return on all investments of 10%. Currently the Boxed Candy Division has average total assets of $2,000,000 with operating income of $400,000. The manger of the Boxed Candy division is considering the purchase of a small company called Truffles Inc. The purchase of Truffles Inc. will require an investment of $800,000 and will increase the Boxed Candy Division operating income by $76,000. Bonuses in all the Foods Enterprise Divisions are awarded to mangers with increasing ROI's. Given the current bonus structure within Foods Enterprise and assuming the managing of the Boxed Candy Division is a self maximizing individual; you would expect the Boxed Candy Division to:

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