Harbor Division has total assets (net of accumulated depreciation) of $680,000 at the beginning of year 1. One of the assets is a machine that has a net book value of $51,000. Expected divisional income in year 1 is $81,000 including $5,900 in income generated by the machine (after depreciation). Harbors cost of capital is 11 percent. Harbor is considering disposing of the asset today (the beginning of year 1), but assume that Harbor has been leasing the machine for $22,000 annually. Assume also that the machine generates income of $5,900 annually after the lease payment. Harbor can cancel the lease on the machine without penalty at any time.

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

ROI before disposal=

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

ROI Before Disposal=

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 asset?

Residual income before disposal=

d. What would divisional residual income be for year 1 assuming Harbor disposes of the asset for its book value (there is no gain or loss on the sale)?

Residual income after disposal=