The manager of the Fleet division of Potlatch Automotive is evaluated on her divisions return on investment and residual income. The company requires that all divisions generate a minimum return on invested assets of 8 percent. Consistent failure to achieve this minimum target is grounds for the dismissal of a division manager. The annual cash bonus paid to division managers is 1 percent of residual income in excess of $100,000. The Fleet divisions operating margin for the year was $9,924,000, during which time its average invested capital was $63,323,000.

Required:

a. Compute the Fleet divisions return on investment (%) AND residual income.

b. Will the manager of the Fleet division receive a bonus for her performance? If so, how much will it be?