Faced with headquarters' desire to add a new product line, Stefan Grenier, manager of Batu Products East Division, 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. Bilti Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI with year end bonuses given to divisional managers who have the highest ROI. Operating results for the company's East Division for last year are given below

Sales

Variable expenses.

$$29,400,000$

Contribution margin Eved expenses

$14,400,00014,330,000$

Operating income

$12,348,000$ $$2,352,000$

Divisional operating assets

$$7,350,000$

The company had an overall ROI of $15\%$ last year $($considering all divisions$).$ The new product line that headquarters wants Grenier's East Division to add would require an investment of $$4\mathrm{.}200,000.$ The cost and revenue charactersties of the new product line per year would be as follows

Sales Variable

$$12,600,000$

ble repenses rixed expenses

Jus of sales $11,428,000$

Required:

$1.$ Compute the East Division's ROI for last year, aiso compute the ROI as it would appear if the new product line were added. $($Do not round intermediate calculations, Round your final answer to the nearest whole number$)$

New Line

Total

ROI

$2.$ If you were in Grenier's position, would you accept or reject the new product line?

Accept Reject