Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,217,000 $ 1,819,000 Cost of goods sold and operating expenses 881,000 1,285,000 Net operating income $ 336,000 $ 534,000 Average invested assets $ 1,150,000 $ 1,450,000 The companys hurdle rate is 6.01 percent.

Required: Calculate return on investment (ROI) and residual income for each division for last year. Recalculate ROI and residual income for each division for each independent situation that follows: Operating income increases by 11 percent. Operating income decreases by 8 percent. The company invests $253,000 in each division, an amount that generates $103,000 additional income per division. Coolbrook changes its hurdle rate to 4.01 percent.