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:

Wescott is considering an expansion project in the upcoming year that will cost $7.2 million and return $653,000 per year. The project would be implemented by only one of the three divisions. Required: 1. Compute the ROI for each division. (Do not round your intermediate calculations. Round your percentage answer to 2 decimal places, (i.e. 0.1234 should be entered as 12.34%.))

4-a. Compute the return on investment on the proposed expansion project. (Round your percentage answer to 2 decimal places, (i.e. 0.1234 should be entered as 12.34%.))

6. Compute the new ROI and residual income for each division if the project was implemented within that division. (Loss amounts should be entered with a minus sign. Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))

Division B $ 1,210,000 $ 1,281,000 $ 1,316,000 941,000 71,000 60,000 2,823,000 Division A Division C Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes 748,000 83,000 67,000 11,587,000 956,000 72,000 60,000 4,640,000 Average invested assets ROI Division A Division B % Division C % 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign.) Residual income (Loss) Division A Division B Division C 3. Rank the divisions according to the ROI and residual income of each Rank Division A Division B Division C Return on Investment of Proposed Expansion Project % 4-b. Is this an acceptable project? Yes No 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI Division A Division B Division C Residual ROI Income (Loss) Division A % Division B % Division C