The division manager of HFD Inc., was debating the merits of a new producta toy drone with a flying radius of 25 feet.

The budgeted income of the division was $875,000 with operating assets of $5,125,000. The proposed investment would add income of $640,000 and would require an additional investment in equipment of $4,000,000. The minimum required return on investment for the company is 13%.

Required:

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1. Compute the ROI of the following (round to the nearest whole percent):

Line Item Description	Answer
a. The division if the drone project is not undertaken.	fill in the blank 1 %
b. The drone project alone.	fill in the blank 2 %
c. The division if the drone project is undertaken.	fill in the blank 3 %

2. Compute the residual income of the following:

Line Item Description	Amount
a. The division if the drone project is not undertaken.	$fill in the blank 4
b. The drone project alone.	$fill in the blank 5
c. The division if the drone project is undertaken.	$fill in the blank 6