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

River Division Stream DivisionSales revenue$1,202,000 $1,817,000Cost of goods sold and operating expenses 891,000 1,292,000Net operating income$311,000 $525,000Average invested assets$1,190,000 $1,460,000

The companys hurdle rate is 6.51 percent.

Required:

1. Calculate return on investment (ROI) and residual income for each division for last year.

2. Recalculate ROI and residual income for the division for each independent situation that follows:

a. Operating income increases by 12 percent.

b. Operating income decreases by 11 percent.

c. The company invests $248,000 in each division, an amount that generates $115,000 additional income per division.

d. Coolbrook changes its hurdle rate to 4.51 percent.