"I know headquarters wants us to add that new product line,' said Dell Havasi, manager of Billings Company's Oifice 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." Bilings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROL with year-end bonuses given to the divisional managers who have the highest ROls. Operating results for the company's Office Products Division for this year are given below: The company had an overall return on investment (ROD) of 16.00% this year (consideting all divisions). Next year the Oifice Products Division has an opportunity to add a new product line that would require an additional investiment that would increas ex average operaung assets by $2.450.000. The cost and revenue characteristics of the new product une per year woud be: Required: 1. Compute the Otfice Products. Oivision s ROI for this year. 2. Compute the Oftice Products Division's ROr for the new product line by itseif 3. Complite the Otfice Products. Division's ROI for next yeat assuming that it oerfarmis the samet as this year and adds the new product line. 4. If you were in Dell Havas position wouid you-accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Olfice Products Division to add the new product line? 6. Suppose that the company's minimum required rate of ietum on operating assefs is 133. and that performince is evaluated using reridual income a. Compute the Office Products Division'y renidual income for this year B. Compute the Office Products Division's reudial incortie for the new product line by itseif. c Compute the Office Products Dinsion's residual income for next year assuming that it performes the same as thas year and acids the new product line. Complete this question by entering your answers in the tabs below. 1. Compute the Office Products Dividion's Rot for this year. 2. Compute the office Productis Division's Rot for the now product line by itself. 3. Compute the office Products Division's RoI for next year assuming that it performs the same as this year and adds the flew product line. (Do not round intermediate calculatione. Round your answers to 2 , decimal places.) Complete this question by entering your answers in the tabs below. If you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Why do you suppose headquarters is anxious for the office. Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the office Producti Division's residual income for the new product line by itseif. c. Compute the Office. Products Division's residual income for next year assuming that it performs the tiame as this year and adds the new product line. Complete this question by entering your answers in the tabs below. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new produc