Fanning Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division.

BOWMAN DIVISION

Income Statement

For the Year Ended December $31,$ Year $2$

Sales revenue $ $107,080$

Cost of goods sold $58,675$

Gross margin $48,405$

Operating expenses

Selling expenses $(2,770)$

Depreciation expense $(4,015)$

Operating income $41,620$

Nonoperating item

Loss on sale of land $(4,000)$

Net income $ $37,620$

BOWMAN DIVISION

Balance Sheet

As of December $31,$ Year $2$

Assets

Cash $ $12,632$

Accounts receivable $40,346$

Merchandise inventory $36,000$

Equipment less accumulated depreciation $90,378$

Nonoperating assets $10,100$

Total assets $ $189,456$

Liabilities

Accounts payable $ $9,457$

Notes payable $68,000$

Stockholders$$ equity

Common stock $77,000$

Retained earnings $34,999$

Total liabilities and stockholder's equity $ $189,456$

Required

C$.$

Calculate the ROI for Bowman.

D$.$

Fanning has a desired ROI of $11$ percent. Headquarters has $$87,000$ of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of $13$ percent. The other two divisions have investment opportunities that yield only $12$ percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman.

E$.$

Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d$.$