Detroit Motors' Mustang division had operating income of $700,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent.

(a) Calculate the return on investment. (Round your answer to three decimal places.)
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(b) Calculate the residual income.
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(c) The Mustang Division has the opportunity to increase operating income by $200,000 with a $950,000 investment in assets.

1. Calculate the Mustang Division's return on investment if the project is carried out. (Round your answer to three decimal places.)
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2. Calculate the residual income of the Mustang Division if the project is carried out.
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