The Spokane Division of Cascade Inc. has a current ROI of 20 percent. The company target ROI is 15 percent. The Spokane Division has an opportunity to invest \($4,000,000\) at 18 percent but is reluctant to do so because its ROI will fall to 19.2 percent. The present investment base for the division is \($6,000,000\) .

Required
Demonstrate how Cascade can motivate the Spokane Division to make the investment by using the residual income method.