ROI 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 $$35,000,000$ $$37,700,000$

Operating income $1,420,0001,540,000$

Average operating assets $5,370,0005,370,000$

Canned Foods Division:

Year $1$ Year $2$

Sales $$11,500,000$ $$12,500,000$

Operating income $670,000570,000$

Average operating assets $5,650,0005,650,000$

At the end of Year $2,$ the manager of the Canned Foods 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:

Juice Box Fruit Pouch

Operating income $$28,000$ $$15,100$

Outlay $220,000170,000$

Allard's corporate headquarters has made available up to $$560,000$ 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, $10$ percent.

Required:

Round your answers to four decimal places before converting to a percentage. For example, $\mathrm{.}06349$ would be rounded to $\mathrm{.}0635$ and entered as $"6\mathrm{.}35"$ percent.

$1.$ Compute the ROI for each investment.

Juice Box ROI fill in the blank $1$

$12\mathrm{.}73$

$\%$

Fruit Pouch ROI fill in the blank $2$

$8\mathrm{.}88$

$\%$

$2.$ Compute the divisional ROI for each of the following four alternatives:

a$.$ The juice box is added.

fill in the blank $3$

$\%$

b$.$ The fruit pouch is added.

fill in the blank $4$

$\%$

c$.$ Both investments are added.

fill in the blank $5$

$\%$

d$.$ Neither investment is made; the status quo is maintained.

fill in the blank $6$

$\%$