Divisional income statements for the year 2006 for the two divisions of a company appear below.

Eastern Division Western Division

Sales $5,000,000 $4,500,000

Operating Expenses 4,000,000 3,100,000

Operating Profit $1,000,000 $1,400,000

Invested Assets $6,000,000 $8,000,000

1. Based on the data above, compute the ROI for the Eastern Division and the Western Division. Please use the Du Pont Model/Formula. Show all work and round to second decimal places. 16 points)
2. b.The company is planning to invest an additional $600,000 in assets in one or the other of the divisions. Which division should the company expand? Why? (4 points)
3. c. When a company decentralizes, what is the primary challenge that it faces? Explain briefly. A few sentences or two should do it. (3 points)
4. d.Compute the Eastern Divisions residual income in the space below. The minimum acceptable rate of return is 9%. Show all work. (4 points)