Coolbrook Company has the following information available for the past year:

River DivisionStream DivisionSales revenue$ 1,220,000$ 1,805,000Cost of goods sold and operating expenses886,0001,287,000Net operating income$ 334,000$ 518,000Average invested assets$ 1,020,000$ 1,520,000

The companys 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 each division for each independent situation that follows:
   1. Operating income increases by 11 percent.
   2. Operating income decreases by 12 percent.
   3. The company invests $247,000 in each division, an amount that generates $115,000 additional income per division.
   4. Coolbrook changes its hurdle rate to 5.51 percent.

Recalculate ROI and residual income for each division for the independent situation that follows: Operating income increases by 11 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign.

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River DivisionStream DivisionROI36.31%37.83%Residual Income (Loss)$294,313 $449,320

Calculate return on investment (ROI) and residual income for each division for last year. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)

River DivisionStream DivisionROI32.75%34.08%Residual Income (Loss)

Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 12 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign.

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River DivisionStream DivisionROI28.76%29.97%Residual Income (Loss)

Recalculate ROI and residual income for each division for the independent situation that follows: The company invests $247,000 in each division, an amount that generates $115,000 additional income per division. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Round your "Residual Income (Loss)" answer to the nearest whole dollars. Loss amounts should be indicated with a minus sign.

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River DivisionStream DivisionROI % %Residual Income (Loss)

Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 5.51 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign.

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River DivisionStream DivisionROI32.75%34.08%Residual Income (Loss)