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ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had an operating income of $700,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent. (a) Compute the return on investment. (Round your answer to three decimal places.) Answer Incorrect (b) Compute the residual income. $Answer Incorrect (c) The Mustang Division has an opportunity to increase operating income by $200,000 with an $950,000 investment in assets. 1. Compute the Mustang Division’s return on investment if the project is undertaken. (Round your answer to three decimal places.) Answer 0 Incorrect 2. Compute the Mustang Division’s residual income if the project is undertaken. $Answer 0 Incorrect