Marlon Inc. has 2 divisions. Each divisions required rate of return is the same as the firms which is 15 percent. Planned operating results for 2002 are as follows:

Division	Income	Invested Capital
Lagos	$50 million	$250 million
Enugu	$22 million	$100 million

Requirement A:

a) Compute the ROI of both divisions and compare their performances based on ROI. Which division is performing better based on ROI?

b) Compute the Residual Income (RI) of both divisions and compare their performances based on RI. Which division is performing better based on RI?

Requirement B:

c) Compute the ROI and RI of a new project under consideration by both divisions which would require $50 million in invested capital and would net $9 million in income.

d) Assume both divisions managers bonuses are tied to their individual divisions ROI. Would the manager of Lagos division accept or reject the project? Would the manager of Enugu division accept or reject the project?. Explain.

e) Repeat (d) but assume that both divisions managers bonuses are tied to their individual RI.

f) State whether top management wants the project to be accepted or rejected. Explain.