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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
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 $1,218,000 896,000 $ 322,000 $1,190,000 Stream Division $1,811,000 1,282,000 $ 529,000 $1,450,000 The company's hurdle rate is 7.76 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 9 percent. b. Operating income decreases by 9 percent. c. The company invests $246,000 in each division, an amount that generates $116,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.76 percent. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Reg 2B Req 2C Req 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, (i.e., 0.1234 should be entered as 12.34%.)) River Division Stream Division % % ROI Residual Income (Loss)
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