E25-6 Evaluating Managerial Performance Using Return on Investment and Residual Income Francis Corp. has two divisions, Eastern and Western. The following information for the past year is for each division. Eastern Division Western Division Sales $ 600,000 $ 900,000 Cost of goods sold and operating expenses 450,000 600,000 Operating Income $ 150,000 $ 300,000 Average invested assets $1,000,000 $1,500,000 Francis has established a hurdle rate of 9 percent. Required: 1. Compute each division’s return on investment (ROI) and residual income for last year. Determine which manager seems to be performing better. 2. Suppose Francis is investing in new technology that will increase each division’s operating income by $144,000. The total investment required is $1,600,000, which will be split evenly between the two divisions. Calculate the ROI and return on investment for each division after the investment is made. 3. Determine whether both managers will support the investment. Explain how their support will differ depending on which performance measure (ROI or residual investment) is used.