Early in January 2016, Tyler, Inc., acquired a new machine and incurred $12,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned net operating income of $95,000 on average total assets of $774,000 for 2016. Assume that the total cost of the new machine will be depreciated over 10 years using the straight-line method.

a. Calculate the ROI for Tyler, Inc., for 2016.

b. Calculate the ROI for Tyler, Inc., for 2016, assuming that the $12,000 had been capitalized and depreciated over 10 years using the straight-line method. (Hint: There is an effect on net operating income and average assets.)