Q2 UK couriers operates in three UK regions. A separate division covers each region. An extract of sales and other operating data of the three main divisions of the firm are as follows: Sales Net assets Pre-tax profit Required rate of return NORTH 12,000,000 3,000,000 600,000 14% MIDLANDS 14,000,000 7,000,000 560,000 10% SOUTH 25,000,000 5,000,000 800,000 16% REQUIRED (a) Compute the return on investment for each division. [9 marks] (b) Compute the residual income for each division. [8 marks] (c) Assume that each division is presented with an investment opportunity yielding 15% rate of return: (i) Which division/divisions will most likely accept or reject the opportunity, if their performance is measured using return on investment? Explain your choices. [4 marks] (ii) Which division/divisions will most likely accept or reject the opportunity, if their performance is measured using residual income? Explain your choices. [4 marks] [Total 25 marks]