Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,214,000 $ 1,813,000 Cost of goods sold and operating expenses 898,000 1,295,000 Net operating income $ 316,000 $ 518,000 Average invested assets $ 1,140,000 $ 1,530,000 The companys hurdle rate is 6.26 percent.

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 8 percent.

b. Operating income decreases by 9 percent.

c. The company invests $241,000 in each division, an amount that generates $108,000 additional income per division.

d. Coolbrook changes its hurdle rate to 4.26 percent.