PART VI(40 POINTS) SJL Co. is a manufacturing company that has two major investment centers. Both divisions have required a significant investment, and management wants to compare the performance of the two divisions. Below is information related to the two divisions.

Division 1:

Sales: $100,000,000

Expenses: $80,000,000

Asset investment: $150,000,000

Division 2:

Sales: $200,000,000

Expenses: $160,000,000

Asset investment: $500,000,000

Management currently requires investments to meet a rate of return on asset investment of 5%.

Required:

1. Which Division has the greatest level of residual income?

2. Which Division has the highest Return on Investment?