Use the following information to answer the next TWO (2) questions.

The Justice Division is one of the three autonomous divisions of Big Brands, Inc. The Justice division has $12,750,000 of capital invested in operating assets, and is currently earning a $3,250,000 operating income annually. A new investment has been proposed to the Justice Division. It will require $4,600,000 of capital in operating assets and will generate $888,000 operating income annually. Big Brands, Inc. requires all its divisions to earn a minimum return of 15% for all investments.

1. What is the Return on Investment (ROI) of Justice Division if it accepts the new investment (i.e., Divisions ROI AFTER the new investment)? (Round to 4 decimal places, XX.XX%) multiple choice 1

   • 23.85%

   • 19.3%

   • 32.45%

   • 25.49%

   • 15%

2. What is the Residual Income (RI) of Justice Division if it accepts the new investment (i.e., Divistion's RI AFTER the new investment?) multiple choice 2

   • $1,535,500

   • $2,225,500

   • $1,337,500

   • $6,740,500

   • $198,000