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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 Stream Division Division $1,218,000 $1,807,000 890,000 1,283,000 $ 328,000 $ 524,000 $1.160.000 $1.580,000 The company's hurdle rate is 7.01 percent. Required: 1. 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 Stream Division Division % ROI Residual Income (Loss) 2. Recalculate ROI and residual income for each division for each Independent situation that follows: (Enter your ROI answers as a percentage rounded to two decimal places. (.e., 0.1234 should be entered as 12.34%.)) a. Operating income increases by 10 percent. River Stream Division Division % % ROI Residual income (Loss) b. Operating income decreases by 10 percent. River Stream Division Division ROI Residual Income (Loss) C. The company invests $245,000 in each division, an amount that generates $116,000 additional income per division River Stream Division Division % ROI Residual Income (Loss) d. Coolbrook changes its hurdle rate to 5.01 percent River Division % Stream Division % % ROI Residual income (Loss)
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