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

	River Division	Stream Division
Sales revenue	$ 1,210,000	$ 1,810,000
Cost of goods sold and operating expenses	884,000	1,286,000
Net operating income	$ 326,000	$ 524,000
Average invested assets	$ 1,070,000	$ 1,420,000

The companys hurdle rate is 7.26 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 10 percent.
   2. Operating income decreases by 8 percent.
   3. The company invests $244,000 in each division, an amount that generates $108,000 additional income per division.
   4. Coolbrook changes its hurdle rate to 5.26 percent.