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Coolbrook Company has the following information available for the past year: The company's hurdle rate is 7.51 percent. Required: 1. Calculate return on investment (ROI)
Coolbrook Company has the following information available for the past year: 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. (Do not round your intermediate calculations. Round "ROI" answers to 2 decimal places.) 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 8 percent. (Do not round your intermediate calculations. Round "ROI" answers to 2 decimal places.) b. Operating income decreases by 10 percent. (Do not round your intermediate calculations. Round "ROI" answers to 2 decimal places.) c. The company invests $256, 000 in each division, an amount that generates $120, 000 additional income per division. (Do not round your intermediate calculations. Round "ROI" answers to 2 decimal places.) d. Coolbrook changes its hurdle rate to 5.51 percent. (Do not round your intermediate calculations. Round "ROI" answers to 2 decimal places.)
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