[The following information applies to the questions displayed below.]

Megamart provides the following information on its two investment centers.

Investment Center	Sales	Income	Average Assets
Electronics	$ 44,250,000	$ 3,363,000	$ 17,700,000
Sporting goods	24,660,000	2,466,000	13,700,000

Exercise 24-10 (Algo) Computing return on investment and residual income; investing decision LO A1

1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income?
2. Assume a target income of 10% of average assets. Compute residual income for each center. Which center generated the most residual income?
3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 10%.