A food group has AED 300 million and two units that want AED 200 million each
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The prompt
Fictional and illustrative. A food group in the United Arab Emirates has AED 300 million to invest next year. The dairy unit asks for AED 200 million and expects a 14 percent return on it. The snacks unit also asks for AED 200 million and expects 10 percent. The group's cost of capital is 9 percent. Assume each unit earns its stated return on whatever it receives, up to what it asked for. The chief financial officer suggests splitting the money evenly, AED 150 million each, "to keep both teams happy". What do you recommend?
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