The performance of the division manager of Rarewood Furniture is measured by ROI, defined as divisional segment income divided by gross book value of total divisional assets. For existing operations, the division's projections for the coming year are as follows: Sales $ 20,000,000 Expenses (17,500,000) Segment income $ 2,500,000 The gross book value of total assets supporting present operations is $12,500,000 Currently, the manager is evaluating an investment in a new product line that would, according to her projections, increase 20x2 segment income by $200,000. The cost of the investment has not yet been determined. The company's cost of capital is 10%. Required Calculate ROI for 20x2 without the new investment. b. Assuming the new product line would require an investment of $1,100,000, calculate the revised projected ROI for the division in 20x2 with the new investment. Would the manager likely accept or reject the investment? Explain. At what investment cost would the manager be indifferent as to whether to make the new investment? Create a brief numerical example to explain and illustrate how the use of residual income as a performance measure may encourage a manager to accept a project that is in the best interests of the company, but that he or she might otherwise reject. (Hint: Using the above situation as an example might be a way of explanation.) d