Faced with headquarte15 desire to add a new product line, Stefan Grenier manager of Bitf Products': East Division, felt that fue had to see the numbers before he made a move. His division's ROl has led the company for three years, and he doesnt want any letdown Eliti Products is a decentraliced wholesaler with four attonomous divisions. The divisions are evaluated on the basis of Rol, with year end bonuses given to divisional managers who have the highest Rol. Operating resuls for the company's East Division for last year are given belowr. The company had an overall ROI of 18% last year (considering all divisions). The new product line that heacquarters wants Grenier's East Division to add would recuire an irvestment of 53,700,000. The cost and revenue characteristics of the new product line per year would be as follows Required: 1. Compute the East Division's ROl for lastyear, aso compute the ROHas it woutd appear if the new product line were added. (Do not round intermediate calculations. Round your final answer to the neorest whole number) 2. if you were in Giemier's position, would you accept or reject the new product line? Accep: Reject 3. Why do youi suppose headquarters is arsdous for the Eust Disision to add the new product line? Adding the new fine would increase the company's overall ROL Adding the new line would clecrease the company's overall ROC. 4. Suppose that the company's minimum requited rate of retum on operating assets is 16% and that performance is evaluated using residual income: a. Cornpute East Division's tesidual income for last year; also compute the residual income as it would appear if the new product line were added. Required: 1. Compute the East Division's ROI for last year: also compute the ROl as it would appear if the new product line were added. (Do nt round intermediate calculations. Round your final answer to the nearest whole number.] 2. If you were in Grenier's position, would you accept or reject the new product line? Accept Rejejct 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? Adding the new line would increase the company's overall ROI. Adding the new line would decrease the company's overail ROI 4. Suppose that the company's minimum required rate of return on operating assets is 16% and that performance is evaluated using residual income. a. Compute East Division's residual income for last year, also compute the residual income as it would appear if the new product line were added. b. Under these circumstances, if you were in Grenser's position. would you accept or reject the new product line? Accept Reject