Acme Manufacturing is a decentralized corporation. Divisions aretreated as inves

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Acme Manufacturing is a decentralized corporation. Divisions aretreated as investment centers. In recent years Acme has beenrunning about 11% ROA for the corporation as a whole and has acost of capital 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 on+e of its plants to produce a promising newproduct. The expansion will cost two million dollars and isexpected to increase operating earnings to $1900000. What factorsshould Walkers manager and her supervisor the VP of operationsconsider in deciding whether to go forward with theexpansion?

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