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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 River Division $ 1,208,000 899,000 $ 309,000 $ 1,190,000 Stream Division $ 1,803,000 1,288,000 $ 515,000 $ 1,590,000 37 The company's 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: a. Operating income increases by 12 percent. b. Operating income decreases by 12 percent. c. The company invests $247,000 in each division, an amount that generates $106,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.51 percent. Answer is not complete. Complete this question by entering your answers in the tabs below.
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