The company had an overall ROI of 12% last year (considering all divisions). The new product line that headquarters wants Grenier's East Division to add would require an investment of $5,400,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales $10,800,000 Variable expenses 60% of sales Fixed expenses $3,564,000 Required: 1. Compute the East Division's ROI for last year; also compute the ROI as it would appear if the new product line were added. ( 6 marks) 2. If you were in Grenier's position, would you accept or reject the new product line? ( 3 marks) 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? ( 3 marks) 4. Suppose that the company's minimum required rate of return on operating assets is 10% and that performance is evaluated using residual income. a. Compute East Division's residual income for last year; also compute the residual income as it would appear if the new product line were added. (5 marks) b. Under these circumstances, if you were in Grenier's position, would you accept or reject the new product line? ( 3 marks) For the toolbar, press ALT+F10(PC) or ALT+FN+F10 (Mac)