Coolbrook Company has the following information available for the past year: The companys hurdle rate is 6

Coolbrook Company has the following information available for the past year:

The company’s hurdle rate is 6 percent.

Required:

1. Calculate return on investment (ROI) and residual income for each division for last year.

2. Recalculate ROI and residual income for each division for each independent situation that follows:

a. Operating income increases by 10 percent.

b. Operating income decreases by 10 percent.

c. The company invests $250,000 in each division, an amount that generates $100,000 additional income per division.

d. Coolbrook changes its hurdle rate to 10percent.

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River Division $1,200,000 $300,000 $1,200,000 Stream Division Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets $1,800,000 1,300,000 $500,000 $1,800,000 900,000