A condensed income statement for the Commercial Division of Maxell Manufacturing Inc. for the year ended December 31 is as follows: 1 Sales 2 Cost of goods sold Gross profit Operating expenses Income from operations Invested assets $3,900,000.00 2,690,000.00 $1,210,000.00 820,000.00 $390,000.00 $3,000,000.00 Assume that the Commercial Division received no charges from service departments. The president of Maxell Manufacturing has indicated that the division's return on a $3,000,000 Investment must be increased to at least 17.00 % by the end of the next year if operations are to continue. The division manager is considering the following three proposals: Proposal 1: Transfer equipment with a book value of $324,500 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $111,000. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged.