Blue Company has prepared the following information for three of its divisions: (click the icon to view the data ) Requirements (a) Compute each division's return on investment and residual income, assuming a 9% cost of capital (b) Suppose the net book value of each division's investments is half of the historical cost Using net book value as the measure of investment, compute each division's return on investment and residual income, assuming a 9% cost of capital (c) Comment on the division rankings in parts a and b. (d) If the division manager Now select the formula labels and calculate the residual income for each division s are rewarded on the basis of return on investment or residual income, will they find it attractive to invest in new, more costly equipment Residual income Division Data Table HISTORICAL COST OF INVESTMENTS DIVISION OPERATING INCOME DIVISION $ 65,000 63,000 43,000 IE S 510,000 480,000 300,000 Print Done