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

	River Division	Stream Division
Sales revenue	$ 1,214,000	$ 1,803,000
Cost of goods sold and operating expenses	882,000	1,292,000
Net operating income	$ 332,000	$ 511,000
Average invested assets	$ 1,160,000	$ 1,530,000

The companys hurdle rate is 8.01 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 11 percent.
   2. Operating income decreases by 12 percent.
   3. The company invests $255,000 in each division, an amount that generates $115,000 additional income per division.
   4. Coolbrook changes its hurdle rate to 6.01 percent.