Mancell Company has sales of \($500,000,\) cost of goods sold of \($370,000,\) other operating expenses of \($50,000,\) average invested assets of \($1,400,000,\) and a hurdle rate of 8 percent.

Required:

1. Determine Mancell’s return on investment (ROI), investment turnover, profit margin, and residual income.

2. Several possible changes that Mancell could face in the upcoming year follow. Determine each scenario’s impact on Mancell’s ROI and residual income. (Note: Treat each scenario independently.)

a. Company sales and cost of goods sold increase by 30 percent.

b. Operating expenses decrease by \($10,000.\) 

c. Operating expenses increase by 20 percent.

d. Average invested assets increase by \($300,000.\) 

e. Mancell changes its hurdle rate to 12 percent.