Chapter 13 Investment Centers and Transfer Pricing Management has determined that in order to upgrade the competitor to Megatronics' standards, an additional $375,000 of invested capital would be needed. Required: As a group, complete the following requirements. 1. Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired. 2. What is the likely reaction of divisional management toward the acquisition? Why? 3. What is the likely reaction of Megatronics' corporate management toward the acquisition? Why? 4. Would the division be better off if it didn't upgrade the competitor to Megatronics' standards? Show computations to support your answer. 5. Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquired. Will divisional management be likely to change its attitude toward the acquisition? Why