After a period of poor stock-market performance, conglomerate Chestnut Foods (Chestnut) faces the acquisition of its stock by an activist investor. The new investor demands the sale of Chestnut’s high-growth division, which contrasts with the CFO’s turnaround plan to expand this same division. To disentangle the way forward for Chestnut, students are invited to grapple with the risk-adjusted performance of each division and the estimation of division-specific hurdle rates. Students learn to appreciate the importance of using risk-adjusted hurdle rates in establishing appropriate investment policy. This B case is typically taught after having discussed the A case (UVA-F-1736), but this is not necessary. At the Darden School of Business, they are taught in separate years, as independent cases, and the A case has a separate teaching note (UVA-F-1736TN). The B case is set one month after the A case and focuses on the performance of product groups within Chestnut’s poorly performing Instruments division. The case is designed as an opportunity to hone skills in performance evaluation.