Vernon Technologies, Inc. has three divisions. Vernon has a desired rate of return of 11.0 percent. The operating assets and income for each division are as follows:

Divisions	Operating Assets				Operating Income
Printer	$	710,000			$	112,890
Copier		980,000				100,940
Fax		530,000				69,960
Total	$	2,220,000			$	283,790

Vernon headquarters has $137,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROIs:

	Expected ROIs for
Divisions	Additional Investments
Printer	12.5	%
Copier	11.5	%
Fax	10.5	%

Required

1. a-1. Calculate the ROI for each division.

2. a-2. Which division manager is currently producing the highest ROI?

3. b. Based on ROI, which division manager would be most eager to accept the $137,000 of investment funds?

4. c. Based on ROI, which division manager would be least likely to accept the $137,000 of investment funds?

5. d. Which division offers the best investment opportunity for Vernon?

6. g. Calculate the residual income:

1. (1) At the corporate (headquarters) level before the additional investment.

2. (2) At the division level before the additional investment.

3. (3) At the investment level.

4. (4) At the division level after the additional investment.

Req A1 eq A2 to DReq G1 Req G2 to G4 Calculate the ROI for each division. (Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) ROI Printer Division Copier Division Fax Division Req A1 Req A2 toD Req A1 Req A2 to DReq G1 Req G2 to G4 a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $137,000 of investment funds? Based on ROI, which division manager would be least likely to accept the $137,000 of investment funds? d. Which division offers the best investment opportunity for Vernon? Req A1 Req G1 > Req A1 Reg A2 to D Req GI E Req G2 to G4 - Calculate the residual income at the corporate (headquarters) level before the additional investment Residual income Req A2 to D Req G2 to G4 Req A1 Req A2 to D Req G1 Req G2 to G4 Calculate the residual income: (Loss amounts should be indicated by a minus sign.) (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. Show less Residual Income (loss) (2) Printer division Copier division Fax division (3) Printer division Copier division Fax division (4) Printer division Copier division Fax division