LaKeesha Roberts is a successful division manager for Textron Industries. Her division's ROI Obj. 4 currently is \(22 \%\). Roberts is evaluating a plant expansion opportunity that is expected to produce an annual income of \(\$ 500,000\) and require an investment of \(\$ 3,000,000\). The corporation's cost of capital is \(12 \%\).

a. If Roberts' performance is based on ROI, will she be inclined to make the investment? Explain.

b. Calculate the residual income for the proposed investment.

c. If Roberts' performance is based on residual income, will she be inclined to make the investment? Explain.

d. Would corporate management encourage Roberts to make the investment? Explain