Selected sales and operating data for three divisions of a multinational structural engineering firm are given below:

	Division
	Asia	Europe	North America
Sales	12,000,000	14,000,000	25,000,000
Average operating assets	3,000,000	7,000,000	5,000,000
Net operating profit	600,000	560,000	800,000
Minimum required rate of return	14%	10%	16%

Required:

1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.

2. Compute the residual income for each division.

3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return.

1. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject? Why?
2. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject? Why?