Other bookmarks B Readir eBook Print Item Residual Income and Investment Decisions Jarriot, Inc., presented two years of data for its Furniture Division and its Houseware Division. Furniture Division: Year 1 Year 2 Sales $35,000,000 Operating income Average operating assets 1,440,000 9,440,000 $38,400,000 1,580,000 9,440,000 Houseware Division: Year 1 Year 2 Sales $11,600,000 $12,700,000 Operating income 610,000 540,000 Average operating assets 5,950,000 5,950,000 At the end of Year 2, the manager of the Houseware Division is concerned about the division's performance. As a result, he is considering the opportunity to invest in two independent projects. The first is called the Espresso-Pro; it is an in-home espresso maker that can brew regular coffee as well as make espresso and latte drinks. While the market for espresso drinkers is small initially, he believes this market can grow, especially around gift-giving occasions. The second is the Mini-Prep appliance that can be used to do small chopping and dicing chores that do not require a full-sized food processor. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows: Espresso-Pro Mini-Prep $28,000 Operating income Outlay $15,100 130,000 180,000