Gingo limited, a national manufacturer of lighting systems, has two divisions: Residential and Business. The following information was provided for the two divisions at the end of the current year:

	Residential	Business
Total assets	$450,000	$2,250,000
Sales	$1,500,000	$4,875,000
Operating income	$135,000	$437,125
Current liabilities	$60,000	$205,000

Senso's management has a target rate of return of 18.5% for each division. Senso's weighted average cost of capital is 13%, and the effective tax rate is 32%.

Required (Show all computations):

1. Compute the Residential division's ROI, RI, and EVA. For each measure, state whether the Residential division's performance is satisfactory or not.

2. Assuming that the Residential division's manager is facing an investment opportunity that would cost $100,000 and generate $19,000 in income. Would the division manager be inclined to undertake this investment opportunity if her performance is assessed solely based on ROI? Elaborate by explaining the implications of using ROI in promoting goal congruence inside the company.