Zachary Technologies, Inc. has three divisions. Zachary has a desired rate of return of 12.0 percent. The operating assets and income for each division are as follows:

Divisions	Operating Assets				Operating Income
Printer	$	730,000			$	114,610
Copier		1,000,000				101,000
Fax		550,000				72,050
Total	$	2,280,000			$	287,660

Zachary headquarters has $139,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROIs:

	Expected ROIs for
Divisions	Additional Investments
Printer	13.5	%
Copier	12.5	%
Fax	11.5	%

Required

1. a-1. Calculate the ROI for each division.

2. a-2. Which division manager is currently producing the highest ROI?

3. b. Based on ROI, which division manager would be most eager to accept the $139,000 of investment funds?

4. c. Based on ROI, which division manager would be least likely to accept the $139,000 of investment funds?

5. d. Which division offers the best investment opportunity for Zachary?

6. g. Calculate the residual income:

1. (1) At the corporate (headquarters) level before the additional investment.

2. (2) At the division level before the additional investment.

3. (3) At the investment level.

4. (4) At the division level after the additional investment.