Faced with headquarters' desire to add a new product line, Stefan Grenier, manager of Bilti 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:

The company had an overall ROI of $16\%$ last year $($considering all divisions$).$ The new product line that

headquarters wants Grenier's East Division to add would require an investment of $$3,800,000.$ The cos

and revenue characteristics of the new product line per year would be as follows:

Sales $$11,400,000$

Variable expenses $$35\%of$ sales

Fixed expenses $$3,306,000$

Required:

Compute the East Division's ROI for last year; also 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.$)$

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