Orange Corporation has two divisions: Fruit and Flower. The following information for the past year is available for each division:

Fruit Division Flower Division

Sales revenue $ $1,500,000$ $ $2,250,000$

Cost of goods sold and operating expenses $1,125,0001,687,500$

Net operating income $ $375,000$ $ $562,500$

Average invested assets $ $3,125,000$ $ $2,343,750$

Orange has established a hurdle rate of $8$ percent.

Required:

$1-$a$.$ Compute each division$$s return on investment $($ROI$)$ and residual income for last year.

$1-$b$.$ Determine which manager seems to be performing better.

$2.$ Suppose Orange is investing in new technology that will increase each division$$s operating income by $$148,000.$ The total investment required is $$2,400,000,$ which will be split evenly between the two divisions. Calculate the ROI and residual income for each division after the investment is made.

$3.$ Determine whether both managers will support the investment.