RV World manufactures travel trailers. The company is decentralized and
has multtiple divisions of which the Manufacturing Division is one of many.
Management are evaluated based on improving ROI from one period to
the next. The company has set a target (hurdle) rate of 18%.
The Manufacturing division has the following data for 2022:
Sales				$ 12,500,000
Total assets, January 1, 2022				28,000,000
Total assets, December 31, 2022				32,000,000
Operating expenses				6,800,000
The company has the opportunity of acquiring a new product line on 01/01/23
Data for this new product line are expected to be as follows for 2023:
Investment in new assets				4,000,000
Expected operating income				800,000
REQUIRED:
1	Prepare the ROI and Residual income for 2022.
2	Calculate the ROI and Residual income of the proposed investment.
3	Should the management of the Manufacturing Division make this
	investment. Why or why not.
4	When a company sets a target or hurdle rate, who is responsible
	for setting the rate.