'I know headquarters wants us to add that new product line', said Dell Havasi, manager of Billings Comparys s Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (RO)! has led the company for three years. and I don't want any letciowni" Ballings Company is a decentrolized wholesoler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with yearend bonuses glven to the divisional managers who have the highest ROIs. Operating results for the company's Office Products Division for this year are aiven below. The company had an overall refum on investment (Rol) of 1700 s this year (considering all divalons). Next year the Orfice Products Division has an opportunity to odd a new product line that would require an odditionol imveatment that would increase averege onerating assets by $2755,000. The cost and revenue characteristics of the new product line per year would be: Required: 1. Compute the Orfice Products Division's ROl for this year 2 Compute the Orfice Products Divisions ROi for the new product line by itseit 3. Compute the Oflice Products Division's ROI for next yeat assuming that it performs the same as this yeafland adds the new product The compary had an overall return on investment (ROD) of 7.00 s bis year (comaidering all divisions) Next year the Office Products Division has an opportunity to add a new oroduct line that would reaulfe an additional investment that would increase averace operating assets by $2,755,000. The cost and revenue characteristics of the new product line per year would be Required: 1 Compute the Office Products Divisions ROH for thin year 2. Compute the Office Products Division's ROI for the new product line by itself. 3 Compute the Office Products Division's Rolfornest year assuming that it performs the same as this yeor and adds the new product line 4. If you were in Dell Hawasis postion, would you occept or reject the new productine? 5 Why do you suppose beadquarters is anxious for the Orfice Products Division to add the new product line? 6. Suppose that the companysiminimum required rate of retum on operafing ossets is 14% and that performance is evaluated using residual income. a. Compute the of lice Products Division's residual income for ins yeof. 6 Compute the Ofice Products Division's residual insone for the niew product line by iself c. Compute the Office Products Division i residual income for next ye or astiming that it performs the some os this year and odds the new product ine. d Using the residunl income approach if you were in Den Havasis positon would you accept or reject thelpew product line? 6. Suppose thot the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income. a Compute the Office Products Division's residual income for this year. b. Compute the Office Products Divition's residual income for the new product line by itself. c Compute the Office Products Oivision's residual income for next year assuming that it performs the same as this year and adds the new product line dUeing the residual income opprosch if you were in Dell Havasis position would you accept or refect the new prodsct line? Complete this question by entering your answers in the tabs below. If you wero in Dell Havasis posibon, would you accept or reject the now product line? 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evoluated using fesiduat Income. a. Compute the Orice Products Division's residual income for this yeac. b. Compute the Office Products Division's residual income foc the new product line by itself c. Compute the Office Products Division's tesidual income for next year assuming that if performs the same as this year and adds the new product line. d. Using the residual income approach, if you were in Dell Havasis position, would you accept or reject the new procuct line? Complete this question by entering your answers in the tabs below. 6. Suppose that the company minimum required rate of return on operating assefs is 144 and that performunce is ivaluated using residual income. a. Compute the Office Products Division I rasidual inconve for this year. b. Compute the Ofrice Products Division s residuas inconve for this yeor. c. Compute the Omice Producta Division's rasidual income for next year assuming that it performs the asme as thit year and adds the new product line. show hesid A 6. Suppose that the compony 5 minimum required rote of retum on operating assets is 14% and that petformance is evaluated using residual income. a. Compute the Ortice Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself c. Compute the Office Product Division's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residual income apprasch if you were in Deli Howsers position would you nccept or reject the new product fine? Complete this question by entering your answers in the tabs below. Using the residual income approach, if you were in Dell Hiavas/s postion, would you occept oc reject the new product fine