What is the Residual Income for the Backpack Division given these new assumptions and based on this should the division adopt the new line? A complete answer should include a $ and a Yes or No.

EXERCISE 4: Suppose that Peak's management has some doubts that the manager of the backpack division can actually earn a 30% ROI on the new line of backpacks and also that the invested assets needed to produce the new backpacks would actually be $350,000. Go back to the original assumptions but revise the expected ROI from 30% to 27% and the invested assets from $300,000 to $350,000. Would these new estimates change the company's decision about producing the new line? Calculate the new overall ROI for the backpack division if the $350,000 is invested: + = New Assets Invested Expected ROI Increase in Op. Income Previous Op. Income New Op. Income $ % = $ + $ $ Now, calculate the new operating assets if the $350,000 is invested: New Assets Invested + = New Op. Previous Assets Assets $ + $ $ Calculate the new overall ROI: ROI = % Operating Income Operating Assets Next, calculate the Residual Income: New Operating Income Operating Assets X Desired ROI = Residual Income $ $ % = $ $ Should the backpack division adopt the new line of backpacks, Yes or No