Honolulu Enterprises has two decentralized divisions (Coconut and Guava) that have decision-making responsibility for the number of resources invested in their divisions. Recent financial extracts for both divisions are presented below:

Coconut			Guava
Fixed assets, gross	$	4,500		$	7,200
Accumulated depreciation	$	2,700		$	2,160
Other assets	$	900		$	1,350
Liabilities	$	900		$	1,800
Sales	$	12,150		$	12,960
Net income after tax*	$	1,330		$	1,810
Average age of fixed assets (years)		15			5

*Net income is after tax but before interest

Honolulu's weighted average cost of capital (WACC) is 15% and the company uses residual income as a method to evaluate performance. Which of the following statements is correct?

• Coconut’s ROI will be raised by divesting of a project with a 20% ROI but its RI will be lower.

• Coconut’s RI will decrease by taking on a project with a $12 cost and net income before interest of $3.

• Guava’s RI will increase by taking on a project with an $8 cost and net income before interest of $1.1.

• Coconut’s RI is less than Guava’s RI.

• None of the choices are correct