Ch PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate on Each (LO 10-4, 10-5) Coolbrook Company has the following information available for the past year. Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets River Division $1,210,000 894,000 $ 316,000 $1,130,000 Stream Division $1,815,000 1,298,000 $ 517,000 $1,450,000 The company's hurdle rate is 8.01 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for the division for each independent situation that follows: a. Operating income increases by 11 percent. b. Operating income decreases by 11 percent. c. The company invests $254,000 in each division, an amount that generates $110,000 additional income per division d. Coolbrook changes its hurdle rate to 6.01 percent. b. Operating income decreases by 11 percent. c. The company invests $254,000 in each division, an amount that generates $110,000 additional income per division. d. Coolbrook changes its hurdle rate to 6.01 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2c Reg 2D Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (1.e., 0.1234 should be entered as 12.34%.)) River Division 27.96% Stream Division 35.66% ROI Residual Income (Loss) Req 2A > Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Req 2c Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Operating income increases by 11 percent. (Enter your ROI answers as a percentage rounded to two decimal places, (.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign.) Stream Division River Division % ROI Residual Income (Loss) Complete this question by entering your answers in the tabs below. bok Req1 Req 2A Req 2B int Reg 2C Req 2D ences Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 11 percent. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign.) River Division Stream Division ROI Residual Income (Loss) Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req 2c Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: The company invests $254,000 in each division, an amount that generates $110,000 additional income per division (Enter your ROI answers as a percentage rounded to two decimal places, (.e., 0.1234 should be entered as 12.34%.). Round your "Residual Income (Loss)" answer to the nearest whole dollars. Loss amounts should be indicated with a minus sign.) Show less River Division 30.78% Stream Division 36 80% ROI Residual Income (Loss)
