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

	River Division			Stream Division
Sales revenue	$	1,208,000		$	1,818,000
Cost of goods sold and operating expenses		886,000			1,298,000
Net operating income	$	322,000		$	520,000
Average invested assets	$	1,090,000		$	1,480,000

The companys hurdle rate is 8.01 percent

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

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 12 percent.

c. The company invests $245,000 in each division, an amount that generates $109,000 additional income per division.

d. Coolbrook changes its hurdle rate to 6.01 percent.