"I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division "But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with flve autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company's Office Products Division for this year are given below: The company had an overall return on investment (ROI) of 16.00% this year (considering all divisions). Next year the Office Prociucts Division has an opportunity to add a new product line thot would require an additional investment that would increase overoge operating assets by $2,501,500. The cost nnt raw...... harocteristics of the new product line per year would be: kequired: 1. Compute the Office Products Division's ROI for this year 2. Compute the Office Products Division's ROI for the new product line by itseif. 3. Compute the Office Products Division's ROI for next yeor assuming that it performs the same as this yeor and adds the new product line. 4. If you were in Dell Havasis position, would you accept or reject the new product line? 5 Why do you suppose headquarters is anxious for the Office Products Division to odd the new product line? 6. Suppose that the company's minimum required rote of retum on operoting assets is 13% and that performonce is evoluated using residual income a Compute the Office Products Division's residual income for this year c Compute the Office Products Division's residual income for the new product line by itself c. Compute the Office Products Divisions residuol income for next yeor ossuming that it performs the same os this year and odds the new product line. d. Using the residual income oppronch if you were in Dell Hovasi's position, would you occept or reject the new product line