Perez 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, 2018
Sales revenue	$	106,580
Cost of goods sold		60,075
Gross margin		46,505
Operating expenses
Selling expenses		(2,700	)
Depreciation expense		(4,135	)
Operating income		39,670
Nonoperating item
Loss of sale of land		(3,600	)
Net income	$	36,070

BOWMAN DIVISION
Balance Sheet
As of December 31, 2018
Assets
Cash	$	12,612
Accounts receivable		40,336
Merchandise inventory		36,300
Equipment less accumulated depreciation		90,408
Nonoperating assets		9,900
Total assets	$	189,556
Liabilities
Accounts payable	$	9,557
Notes payable		63,000
Stockholders equity
Common stock		71,000
Retained earnings		45,999
Total liabilities and stockholder's equity	$	189,556

Required

3. Calculate the ROI for Bowman.

4. Perez has a desired ROI of 15 percent. Headquarters has $86,000 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 17 percent. The other two divisions have investment opportunities that yield only 16 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman.

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

Required C

ROI __%

Required D

New ROI __%

Required E

Original Residue Income

New Residual Income