As CFO,you are trying to allocate investment funds across your three-division firm.You observe the revenues last year for Divisions A,B,and C as $1.0 billion,$4.0 billion,and $5.0 billion,respectively.You should therefore allocate investment budgets of 10,40,and 50 percent,respectively,of the overall firm's investment budget to Divisions A,B,and C.

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Quizplus · Accepted Answer

This is not an appropriate technique to use unless the ROIC and growth projections for the three divisions are all the same, which is quite unlikely. Funds should be allocated based on the ROIC and growth projections.

As CFO,you Are Trying to Allocate Investment Funds Across Your