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Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $1,217,000 $1,812,000 Cost of goods sold and
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $1,217,000 $1,812,000 Cost of goods sold and operating expenses 883,000 1,289,000 Net operating income Average invested assets $ 334,000 $ 523,000 $1,050,000 $1,400,000 ces 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. 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 9 percent. c. The company invests $255,000 in each division, an amount that generates $114,000 additional income per divisi d. Coolbrook changes its hurdle rate to 5.01 percent.
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