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  • Exam Code: C_HRHPC_2405
  • Exam Name: SAP Certified Associate - Implementation Consultant - SAP SuccessFactors for Employee Central Payroll
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A company operates a divisional structure. The manager of division D receives a bonus based on the division's annual return on capital employed (ROCE).
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This year division D achieved a ROCE of 24% and the divisional manager received a large bonus.
The manager is considering an investment in a new machine for next year. The incremental ROCE earned by the machine is expected to be 19% although the ROCE for the division as a whole with the machine is expected to be 22%. Without the machine, ROCE is likely to be stable at 24%.
The cost of capital for the company as a whole is 18% per year.
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B. The manager will accept the investment because it will earn a ROCE that is higher than the company's cost of capital.
C. The manager will reject the investment because it will result in the receipt of no bonus.
D. The manager will accept the investment because overall the division will earn a ROCE that exceeds the minimum target of 20%.
Answer: A

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