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It is where a manager is asked to budget how much he expects to spend next year, and deliberately budgets to spend more than he really needs.
The reason is that managers are often measured and rewarded for spending less than budget, so if you budget a higher figure it will be much easier for you to actually spend less 🙂a company has capital employed of $500 000.
it has a cost capital of 15%/year and a ROI of 17%/year
i worked this question and got $10000 positive.and the actual answer is $10000 negative.
Why is the answer negative???????????????
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