A firm has four division - food, cookware, retail, and credit services - that generate revenues of $1.5 million, $3.8 million, $5.6 million, and $3.9 million, respectively.
1. Compute the Herfindahl Index (HI) for the firm. Round you answer to four decimal places.
2. The firm is considering the purchase of a rival retailer, which would increase the retail division's revenues by another $3.2 million. The firm is also considering selling its credit services division. Assuming these two actions occur, what will the HI become? Round you answer to four decimal places.
3. What is the HI if the sale of the credit division does not occur, but the rival is acquired? Round you answer to four decimal places.