Vernon Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division.

BOWMAN DIVISION
Income Statement
For the Year Ended December 31, Year 2
Sales revenue	$	106,680
Cost of goods sold		59,575
Gross margin		47,105
Operating expenses
Selling expenses		(2,810	)
Depreciation expense		(4,085	)
Operating income		40,210
Nonoperating item
Loss on sale of land		(4,800	)
Net income	$	35,410

BOWMAN DIVISION
Balance Sheet
As of December 31, Year 2
Assets
Cash	$	12,612
Accounts receivable		40,306
Merchandise inventory		37,700
Equipment less accumulated depreciation		90,268
Nonoperating assets		9,300
Total assets	$	190,186
Liabilities
Accounts payable	$	9,447
Notes payable		70,000
Stockholders equity
Common stock		80,000
Retained earnings		30,739
Total liabilities and stockholder's equity	$	190,186

Required

Calculate the ROI for Bowman.

Vernon has a desired ROI of 11 percent. Headquarters has $92,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 13 percent. The other two divisions have investment opportunities that yield only 12 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman.

Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d.