The Upholstery Division at Robinsons Furniture recorded operating data as follows for the past year:

Sales $400,000

Gross margin 80,000

Net operating income 50,000

Stockholders equity 90,000

Average operating assets 200,000

Minimum required rate of return 14%

a. For the past year, the return on investment was?

b. The residual income for the Upholstery Division would be?

c. Assume that the Upholstery Division has the opportunity to invest in a project that will cost $70,000 and will yield annual net income of $14,000. Which of the two measuresROI or Residual Incomewould be increased if Jenkins made this investment?