Munoz Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division.

BOWMAN DIVISION
Income Statement
For the Year Ended December 31, Year 2
Sales revenue	$	106,880
Cost of goods sold		58,475
Gross margin		48,405
Operating expenses
Selling expenses		(2,740	)
Depreciation expense		(4,015	)
Operating income		41,650
Nonoperating item
Loss on sale of land		(4,600	)
Net income	$	37,050

BOWMAN DIVISION
Balance Sheet
As of December 31, Year 2
Assets
Cash	$	12,572
Accounts receivable		40,326
Merchandise inventory		36,700
Equipment less accumulated depreciation		90,318
Nonoperating assets		9,900
Total assets	$	189,816
Liabilities
Accounts payable	$	9,627
Notes payable		70,000
Stockholders equity
Common stock		73,000
Retained earnings		37,189
Total liabilities and stockholder's equity	$	189,816

Required

Calculate the ROI for Bowman.

Munoz has a desired ROI of 11 percent. Headquarters has $94,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 13 percent. The other two divisions have investment opportunities that yield only 12 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman.

Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d.