Faced with headquarters' desire to add a new product Inne, Stefan Grenler, manager of Biltl Products' East Divislon, felt that he had to see the numbers before he made a move. His division's ROI has led the company for three years, and he doesn't want any letdown. Bilt Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROl, with yearend bonuses given to dlvisional managers who have the highest ROl. Operating results for the company's East Division for last year are glven below: The company had an overall ROI of 19% last year (considering all divlsions). The new product line that headquarters wants Grenler's East Division to add would require an Investment of $4,400,000. 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 last year; also compute the ROl as it would appear if the new product line were added. (Do not round intermedlate calculations. Round your final answer to the nearest whole number.) 2 If you were in Grenler's position, would you accept or reject the new product line? Accept Reject 3. Why do you suppose headquarters is anxlous for the East Division to add the new product line? Adding the new line would increase the company's overall ROl. Adding the new line would decrease the company's overall 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 Grenler's position, would you accept or reject the new product line? Accept Reject