Aurora solely manufactures kayaks, and is a division of a public company, Burlington. Aurora's kayaks are sold to all major outdoor equipment retailers in Canada. Each kayak sells at a price of $940 and last year, Aurora achieved a record number of sales of 10,600 kayaks. the variable costs to manufacture kayaks for Aurora is $875/unit. Aurora's manufacturing plant has the capacity to make a total of 16,400 kayaks per year, with total fixed costs of $528,070. Aurora's net operating assets amount to $1,540,000.

Burlington Co. historically has required a minimum return of 10% on all investments. This year Burlington Co.'s exec management team has experienced a significant turnover, and a new CEO, CFO, and COO have recently been hired. the new management team is eager to demonstrate strong growth to its shareholders, and is considering setting a new, more aggressive target, of a required return of 14% for all divisions.

1. Calculate Aurora's current return on investment
2. Calculate Aurora's current residual income
3. If the new exec team implements a required return of 18%, what is the required revenue in units sold that Aurora must make to satisfy this new rate?
4. Provide Aurora's management team with one practical recommendation on how improve their ROI to meet the new required rate of return.