The Plastics Division of Minock Manufacturing currently earns $$2\mathrm{.}64$ million and has divisional assets of $$22$ million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $$5,448,000$ and will have a yearly cash flow of $$1,454,000.$ The asset will be depreciated using the straight$-$line method over a five$-$year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning$-$of$-$year net book values in the denominator. The company's cost of capital is $7$ percent. Ignore taxes. The division manager learns that there is an option to lease the asset on a year$-$toyear lease for $$1,162,000$ per year. All depreciation and other tax benefits would accrue to the lessor.

Required:

a$.$ What is the division's residual income before considering the project?

b$.$ What is the division's residual income if the asset is purchased?

c$.$ What is the division's residual income if the asset is leased?

Note: For all requirements, enter your answers in dollars, not in millions.

$\backslash$table$[[$a$.$ Residual income,$$,1,100],[$b$.$ Residual income,$$,1,083],[$c$.$ Residual income,$$,1,392]]$