The XYZ Manufacturing Company has two divisions: Division X and Division Y. Operating results for the two divisions for last year were as follows. Division X Division Y

Residual income $98,400 $27,200

Net operating income $188,600 $115,600

Average operating assets $820,000 $680,000

Sales $1,640,000 $1,445,000

Profit margin 11.5% 8.0%

Cost of capital 11.0% 13.0% Corporate headquarters is offering an investment opportunity to each of the divisions. The opportunity will yield an operating income of $35,000, based on an average operating investment of $246,000.

Required: a. If the divisions are being evaluated using return on investment (ROI), what will be the decision (accept or reject) of each division regarding this opportunity? Support your answer with the appropriate calculations. b. If the divisions are being evaluated using residual income, what will be the decision (accept or reject) of each division regarding this opportunity? Support your answer with the appropriate calculations.