The manager of a division that produces add-on products for the automobile industry had just been presented the opportunity to invest in two independent projects.

The first is an air conditioner for back seats of vans and minivans. The second is a turbocharger.

Without the investments, the division will have average assets for the coming year of $36 million and expected operating income of $5.4 million.

The outlay required for each investment and the expected operating incomes are as follows:

	Air Conditioner	Turbocharger
Outlay	$800,000	$550,000
Operating income	$104,000	$85,250

Compute the budgeted divisional ROI for each of the following four alternatives

The air conditioner investment is made

The turbocharger investment is made

Both investments are made

Neither additional investment is made