Pacific Corporation has a number of autonomous divisions. Its real estate division has recently reviewed a number of investment proposals.

a. A new office building would cost $450,000 and would generate yearly net in- come of $80,000.

b. A computer system would cost $350,000 and would reduce bookkeeping and clerical costs by $50,000 annually.

c. A new apartment house would cost $900,000 and would generate yearly net in- come of $150,000. The real estate division currently has total assets of $1,800,000 and net income of $350,000. wlant mest. 19.47 1. Assuming that the performance of the manager of the real estate division is eval- uated on the basis of the division's ROI, evaluate each of the independent pro- posals, and determine whether it should be accepted or rejected. 2. Assuming that the manager's performance is evaluated on a residual income ba- sis, determine whether each of the proposals should be accepted or rejected. (The division's minimum accepted rate of return is 15 percent.)