Residual Income and Investment Decisions Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Frozen Foods Division: Year 1 Year 2 Sales Operating income $35,100,000 $37,900,000 1,400,000 1,500,000 Average operating assets 8,790,000 8,790,000 Canned Division: Year 1 Year 2 Sales Operating income Average operating assets $11,500,000 $12,800,000 640,000 5,650,000 510,000 5,650,000 At the end of Year 2, the manager of the Canned Division is concerned about the division's performance. As a result, he is considering the opportunity to invest in two independent projects. The first is juice boxes for elementary school children. The second is fruit and veggie pouches for kids on the go. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows: Operating income Outlay Juice Box $28,000 150,000 Fruit Pouch $15,200 100,000 Allard's corporate headquarters has made available up to $580,000 of capital for this division. Any funds not invested by the division will be retained by headquarters and invested to earn the company's minimum required rate of return, 7 percent. Required: