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Use the following information to answer the next TWO (2) questions. The Justice Division is one of the three autonomous divisions of Big Brands, Inc.
Use the following information to answer the next TWO (2) questions. The Justice Division is one of the three autonomous divisions of Big Brands, Inc. The Justice division has $12,750,000 of capital invested in operating assets, and is currently earning a $3,250,000 operating income annually. A new investment has been proposed to the Justice Division. It will require $4,100,000 of capital in operating assets and will generate $848,000 operating income annually. Big Brands, Inc. requires all its divisions to earn a minimum return of 15% for all investments. 1. What is the Return on Investment (ROI) of Justice Division if it accepts the new investment (i.e., Division's ROI AFTER the new investment)? (Round to 4 decimal places, XX.XX%) O 25.49% O 32.14% O 15% O 24.32% O 20.68% 2. What is the Residual Income (RI) of Justice Division if it accepts the new investment (i.e., Divistion's RI AFTER the new investment?) O $6,625,500 O $2,185,500 O $1,337,500 $1,570,500 O $233,000 O
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