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Megamart provides the following information on its two investment centers.

Investment Center Sales Income Average Assets

Electronics $ $40,000,000$ $ $2,880,000$ $ $16,000,000$

Sporting goods $20,000,0002,040,00012,000,000$

Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income?

Assume a target income of $12\%$ of average assets. Compute residual income for each center. Which center generated the most residual income?

Assume the Electronics center is presented with a new investment opportunity that will yield a $15\%$ return on investment. Should the new investment opportunity be accepted? The target return is $12\%.$