World Information Group has two major divisions: print and Internet. Summary financial data (in millions) for 2011 and 2012 are:

	Operating Income			Revenues			Total Assets
	2011	2012		2011	2012		2011	2012
Print	$3,780	$5,850		$18,700	$18,800		$18,450	$22,500
Internet	560	754		25,100	26,000		11,250	13,000

The annual bonuses of two division manageres are basd on division ROI (defined as operating income divided by total assets). If a division reports an increase in ROI from the previous year, its management is automatically elidgible for a bonus; however, the management of a division reporting a decline in ROI has to presetnt an explanation to the World Information Group board and is unlikely to get any bonus.

Carol Mays, manager of the print division, is considered a proposal to invest $1,550 million in a new computerized news reporting and printing system. It is estimated that the new system's state-of-the-are graphics and ability to quick incorporate late-breaking news into papers will increase 2013 division operationg income by $310 million. Woyld Information Group uses a 16% required rate of return on investment for each decision.

1- Use the Dupont method of profitability analysis to explain differences in 2012 ROIs between the two divisions. Use 2012 total assets as the investment base.

2- Why might Mays be less than enthusiastic about accepting the investment proposal for the new system, despite her belief in the benefits of the new technology?

3- Brett Gostkowski, CEO of World Information Group, is considering a proposal to base division executive compensation on division RI.

A) Compute the 2012 RI of each division

B) Would adoption of an RI measure reduce May's reluctance to adopt the new computerized system investment proposal?

4- Gostkowski is concerned that the focus on annual ROI could have an adverse long-run effect on World Information Group's customers. What other measurements, if any, do you recommend that Gostkowski use? Explain briefly.