The following information applies to the questions displayed below.]

Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the company as a whole produced a 13 percent return on its investment.

During the past week, management of the company?s Western Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the Western Division and the competitor:

	Western Division	Competitor
Sales	$	4,200,000		$	2,600,000
Variable costs		70	% of sales		65	% of sales
Fixed costs	$	1,075,000		$	835,000
Invested capital	$	925,000		$	312,500

Management has determined that in order to upgrade the competitor to Megatronics? standards, an additional $187,500 of invested capital would be needed.

The following information applies to the questions displayed below.] Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the company as a whole produced a 13 percent return on its investment. During the past week, management of the company's Western Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the Western Division and the competitor: Sales Variable costs Fixed costs Invested capital Western Division 4,200,00 $ 0 70% of sales 1,075,00 $ 0 $ 925,000 Competitor 2,600,00 $ 0 65% of sales $ 835,000 $ 312,500 Management has determined that in order to upgrade the competitor to Megatronics' standards, an additional $187,500 of invested capital would be needed. Required: 1. Compute the current ROI of the Western Division and the division's ROI if the competitor is acquired. (Round your "Percentage" answer to 2 decimal places (i.e., .1234 should be entered as 12.34).) Calculate the Western Division's ROI after acquisition of competitor but before upgrading. (Round your "Percentage" answer to 2 decimal places. (i.e., .1234 should be entered as 12.34).) Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimum return on invested capital. Compute the current residual income of the Western Division and the division's residual income if the competitor is acquired