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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
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 The company's hurdle rate is 7.76 percent. Required: River Division $ 1,207,000 885,000 $ 322,000 $ 1,040,000 Stream Division $ 1,809,000 1,295,000 $ 514,000 $1,550,000 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 12 percent. b. Operating income decreases by 9 percent. c. The company Invests $246,000 in each division, an amount that generates $117.000 additional Income per division. d. Coolbrook changes its hurdle rate to 5.76 percent.
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