1. Consider the following data for Red & Blue divisions of Violet Co.:

	Red							Blue
Sales	$	3,000,000							$	2,000,000
Cost of Goods Sold		900,000								400,000
Operating Income		600,000								450,000
Investment in assets		4,000,000								2,500,000

The company's required rate of return is 10%. Show your work to support the following calculations:

1. Calculate the ROI for each division.
2. Calculate the Residual Income (RI) for each division.
3. Calculate the Profit Margin for each division.
4. If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an ROI of 15%, what will the units likely decide?

Division Red will _______________________________________________________________

Division Blue will ________________________________________________________________