Thank you in advance

Residual Income and Investment Decisions arriot, Inc., presented two years of data for its Furniture Division and its Houseware Division Furniture Division: Year 1 Year 2 Sales Operating income Average operating assets $35,100,000 $37,700,000 1,580,000 4,070,000 4,070,000 1,380,000 Houseware Division: Year 1 Year 2 Sales Operating income Average operating assets At the end of Year 2, the manager of the Houseware 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 called the Espresso-Pro; it is an in-home espresso maker that can brew regular coffee as well as make espresso and latte drinks. While the market for espresso drinkers is small initially, he believes this market can grow, especially around gift-giving occasions. The second is the Mini-Prep appliance that can be used to do small chopping and dicing chores that do not require a full-sized food processor. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the $11,800,000 $12,800,000 530,000 5,800,000 680,000 5,800,000 outlay required for each investment are as follows: Espresso-Pro Mini-Prep $15,000 Operating income Outlay Darriot'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 $28,000 160,000 110,000