The Fitzroy Division of Brisbane Enterprises Has Negative Residual Income

Multiple Choice

The Fitzroy division of Brisbane Enterprises has negative residual income of $540 000. Fitzroy's management is considering an investment opportunity that will reduce this negative amount to $400 000. The investment:

A) should be pursued because it is attractive from divisional and corporate perspectives.
B) should be pursued because it is attractive from a divisional perspective although not from a corporate perspective.
C) should be pursued because it is attractive from a corporate perspective, although not from a divisional perspective.
D) should not be pursued because it is unattractive from a divisional perspective although it is attractive from a corporate perspective.