7 know headquarters wants us to add that new product tine," said Dell Havasi, manager of elltings Company's Office Products Division "But I want to see the numbers before I make any move. Our division's retum on investment (Ron has led the company for three years, and lon't want any letdown." Ballings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROR, with year-end bonuses given to the divisional managers who have the highest ROls. Operating results for the company's Otfice Products Division for this year are given below: The company had an overall return on imvestment (RO0 of 16.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to odd o new product line that would require an odditional investmiont that would increase average operating assets by $2,450,000. The cost and revenue characteristics of the new product line per yoar would be: Required: 1. Compute the Office Products Division's Rol for this year. 2 Compute the Office Products Division's ROI for the now product line by itseif. 3. Compute the Office Products Division's ROi for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept of reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year b. Compute the Office Products Division's residual income for the new product line by itselt c. Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. c. Compute the Office Products Dlvision's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. 1. Compute the Office Products Division's ROI for this year. 2. Compute the Office Products Division's ROI for the new procuct line by itself. 3. Compute the Office Producte Division's ROI for next year assuming that it performs the same as this year and adds the new product line. (Do not round intermediate calculations: Round your answers to 2 decirmal places.)