Harbor Division has total assets (net of accumulated depreciation) of $712,000 at the beginning of year 1. Harbor also leases a machine for $17,000 annually. Expected divisional income in year 1 is $83,000 including $5,000 in income generated by the leased machine (after the lease payment). Harbor's cost of capital is 9 percent. Harbor can cancel the lease on the machine without penalty at any time and is considering disposing of it today (the beginning of year 1).

Required:

a.Harbor computes ROI using beginning-of-the-year net assets. What will the divisional ROI be for year 1 assuming Harbor retains the leased machine?(Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).)

b.What would divisional ROI be for year 1 assuming Harbor disposes of the leased machine?(Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).)

c.Harbor computes residual income using beginning-of-the-year net assets. What will the divisional residual income be for year 1 assuming Harbor retains the leased machine?

d.What would divisional residual income be for year 1 assuming Harbor disposes of the leased machine?