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The Red division has a current ROI of 12 % The company target ROI is 8%. The Red division has an opportunity to invest $4,900,000

The Red division has a current ROI of 12 % The company target ROI is 8%. The Red division has an opportunity to invest $4,900,000 at 10% but is reluctant to do so because its ROI will fall to 11.30%. The present investment base for the division is $9,100,000

Calculate the current residual income and the residual income with the new investment opportunity being included.

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