Wescott Company has three divisions: A$,$ B$,$ and C$.$ The company has a hurdle rate of $8$ percent. Selected operating data for the three divisions are as follows:

Division A Division B Division C

Sales revenue $ $1,295,000$ $ $1,072,000$ $ $1,074,000$

Cost of goods sold $800,000787,000780,000$

Miscellaneous operating expenses $72,00060,00061,000$

Interest and taxes $56,00049,00049,000$

Average invested assets $9,684,0002,306,0003,793,000$

Wescott is considering an expansion project in the upcoming year that will cost $$5\mathrm{.}8$ million and return $$532,000$ per year. The project would be implemented by only one of the three divisions.

Required:

$1.$ Compute the ROI for each division.

$2.$ Compute the residual income for each division.

$3.$ Rank the divisions according to the ROI and residual income of each.

$4-$a$.$ Compute the return on investment on the proposed expansion project.

$4-$b$.$ Is this an acceptable project?

$5.$ Without any additional calculations, state whether the proposed project would increase or decrease each division$$s ROI.

$6.$ Compute the new ROI and residual income for each division if the project was implemented within that division.