The company had an overall ROI of 8.5% last year (considering all divisions). The office products division has an opportunity to add a new product line that would require an additional investment in operating assets of $10,200,000. The cost and revenue characteristics of the new product line per year would be as follows:

Sales	$	15,300,000
Variable expenses		70	% of sales
Fixed expenses	$	3,672,000

Required:

1.	Compute the office products divisions ROI for the most recent year; also compute the ROI if the new product line were added. (Do not round intermediate calculations. Round "Percentage" answers to 2 decimal places, (i.e., 0.1234 should be considered as 12.34%).)

2.

If you were in Dell Havasis position, would you be inclined to accept or reject the new product line?

	Accept
	Reject

3.	Not available in Connect.

4.	Suppose that the company views a return of 8.0% on invested assets as being the minimum that any division should earn and that performance is evaluated by the RI approach.

a.	Compute the office products divisions RI for the most recent year; also compute the RI as it would appear if the new product line were added.

b.

Under these circumstances, if you were in Dell Havasis position, would you accept or reject the new product line?

	Accept
	Reject