Required

3. Calculate the ROI for Bowman.

4. Perez has a desired ROI of 13 percent. Headquarters has $91,000 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 15 percent. The other two divisions have investment opportunities that yield only 14 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.

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 $106,780 58,675 48,105 Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense (2,680) (4,175 41, 250 Operating income Nonoperating item (3,300 $ 37,950 Loss of sale of land Net income BOWMAN DIVISION Balance Sheet As of December 31, 2018 Assets 12,472 40,396 36,700 90,358 9,700 $189,626 Cash Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets Total assets Liabilities $ 9,467 70,000 Accounts payable Notes payable Stockholders' equity Common stock Retained earnings 72,000 38,159 $189,626 Total liabilities and stockholder's equity