Within a large rental corporation where the commercial rental segment dominated, Gary managed the residential rental segment.

Gary enjoyed taking the underdog role, trying to generate more income and higher retums than corporate expected. The corporate

minimum required returm was $8\%,$ while its WACC was $7\%.$ He recently became aware of new rental properties in a prime location. He

assumed he'd be able to secure two key rental properties in his target area. He considered where his division stood in terms of

profitability and asset position at year$-$end, and created a projection for the next year as follows.

$($a$)$

Calculate the ROI for Gary's residential division at the end of the current year and at the end of the following year, per his

projections $($where operating assets are considered investments$).$ Assume that Gary is evaluated on generating a positive$-$

trending ROI. $($Round answers to $2$ decimal places, e$.$g$.15\mathrm{.}25\%).$

Current ROI

$\%$

Projected ROI

$\%$

If you were him, would you push forward with these real estate purchases?