Carmel Corporation has three divisions, which are the Carmel, Pear, and Cranberry Divisions. The managers of each division are given bonuses based on the divisions return on investment. In 2019, the company had a ROI of 13% overall. The Carmel Division current has an investment opportunity that would help the division grow in the future (looking to use electric power). Here is the relevant information related to the decision.

	Carmel Division	Potential Investment
Invested Capital	78,000,000.00	32,000,000.00
Income	13,000,000.00	4,500,000.00

1. Calculate the Carmel Divisions ROI before the investment opportunity.
2. Calculate the Carmel Divisions ROI after the investment opportunity.
3. What would the executive team of Carmel Corporation think about the investment? Why?
4. Now, assume that Carmel Corporation uses residual income to evaluate performance instead of ROI. The minimum return on invested capital is required to be at least 12%. Calculate the current residual income as well and the residual income after the investment opportunity. Will the Carmel Division make a different decision based on residual income versus ROI? Why?