Return on Investment for Multiple Investments, Residual income The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects. The first sa conditioner for the back seats of vans and minivans. The second is a turbocharger. Without the investments, the division will have average assets for the coming year of $20.9 and expected operating income of 54.335 million. The outlay required for each investment and the expected operating Incomes are as follows: Air Conditioner Turbocharger Outlay $750,000 5540,000 Operating income 90,000 82.000 Required: 1. Compute the ROI for each investment project. Round to the nearest whole percent. Air conditioner, ROI Turbocharger, ROI 2. Compute the budgeted divisional Rol for each of the following four alternative Round to two decimal places a. The air conditioner investment is made b. The turbocharger Investment is made c. Both investments are made O d. Neither additional investment is made 3. Conceptun Connection Assuming that divisional managers are evaluated and rewarded on the basis of Kot performance, which alternative do you think the divisional manager will choose? 4. Conceptual Connection Suppose that the company sets a minimum required rate of return equal to 1.Calculate the residual income for arch of the following four alternativet: a. The air conditioner investment is made s b. The turbocharger investment is made c. Both investments are made 3 d. Nether additional investment is made Which option will the manager choose based on residual income! 5. Conceptual Connection Suppose that the company sets a minimum required rate of return equal to 10. Calculate the residual income for each of the following four alternatives a. The ait conditioner investment is made b. The turbocharger investment is made c. Both investments are made d. Neither additional investment is made Based on residual income, which is the most profitable