A company has multiple retail stores. One store manager is considering a change in product mix. The manager would like to invest $700,000 in more expensive merchandise (an increase in working capital) with the expectation that it would increase annual sales and variable expenses by $500,000 and $300,000 respectively for each of the next three years. After that time, the manager would release the additional increase in working capital back to corporate. The store manager's compensation (particularly bonuses) is determined by the store's return on investment, which has been over 20% in each of the last five years. 1. Calculate the return on investment provided by the store manager's investment request 2. Assuming the company's minimum required rate of return is 16%, calculate the residual income earned by the store manager for each of the years the store uses the additional working capital. 3. Should the store manager undertake this opportunity? Why or why not? 4. Would the company want the store manager to do this? Why or why not