Problem $10-18($Algo$)$ Return on Investment $($ROI$)$ and Residual Income $[$LO$10-1,$LO$10-2]$

Requirea:

Compute the Office Products Division's ROI for this year.

Compute the Office Products Division's ROI for the new product by itself.

Compute the Office Products Division's ROI for next year assuming it performs the same as this year and adds the new product line.

If you were in Dell Havasi's position, would you accept or reject the new product?

Why do you suppose headquarters is anxious for the Office Products Division to add the new product?

Suppose the company's minimum required rate of return on operating assets is $16\%$ and performance is evaluated using residual income.

a$.$ Compute the Office Products Division's residual income for this year.

b$.$ Compute the Office Products Division's residual income for the new product by itself.

c$.$ Compute the Office Products Division's residual income for next year assuming it performs the same as this year and adds the new product.

d$.$ Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product?

Complete this question by entering your answers in the tabs below.

Required $1$ to $3$

Required $4$

Required $5$

Required $6$A to

$6$ C $6$C

Required $6$D

Compute the Office Products Division's ROI for this year.

Compute the Office Products Division's ROI for the new product by itself.

Compute the Office Products Division's ROI for next year assuming it performs the same as this year and adds the new product line.

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.

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