a.Acme Manufacturing is adecentralized corporation. Divisions are treated asinve

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a.Acme Manufacturing is adecentralized corporation. Divisions are treated asinvestment centers. In recent years Acme has been runningabout 11% ROA for the corporation as a whole and has a cost ofcapital of 8%. One of their most profitable divisions isWalker Products which last year had ROA of 20% ($1600000operating income on assets of $8000000). Walker has anopportunity to expand one of its plants to produce a promising newproduct. The expansion will cost two million dollars and isexpected to increase operating earnings to $1900000. Whatfactors should Walkers manager and her supervisor the VP ofoperations consider in deciding whether to go forward with theexpansion?

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