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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 $1,201,000 883,000 Hi 318,000 1,040,000 Stream Division $1,801,000 1,285,000 $ 516,000 $1,490,000 The company's hurdle rate is 7.51 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 10 percent. b. Operating income decreases by 11 percent. c. The company invests $246,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.51 percent
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