E$10-6($Algo$)$ Calculating Return on Investment, Residual Income, Determining Effect of Changes in

Sales, Expenses, Invested Assets, Hurdle Rate on Each $[$LO $10-4,10-5]$

Solano Company has sales of $$760,000,$ cost of goods sold of $$500,000,$ other operating expenses of $$40,000,$ average invested

assets of $$2,250,000,$ and a hurdle rate of $11$ percent.

Required:

Determine Solano's return on investment $($ROI$),$ investment turnover, profit margin, and residual income.

Several possible changes that Solano could face in the upcoming year follow. Determine each scenario's impact on Solano's ROI

and residual income. $($Note: Treat each scenario independently.$)$

a$.$ Company sales and cost of goods sold increase by $40$ percent.

b$.$ Operating expenses decrease by $$11,000.$

c$.$ Operating expenses increase by $20$ percent.

d$.$ Average invested assets increase by $$430,000.$

e$.$ Solano changes its hurdle rate to $17$ percent. Determine Solano's return on investment $($ROI$),$ investment turnover, profit margin, and residual income. $($Loss amounts

should be indicated with a minus sign. Do not round your intermediate calculations. Enter your ROI and Profit Margin

percentage answer to the nearest $2$ decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%).$ Round your Investment

Turnover answer to $4$ decimal places.$)$ Several possible changes that Solano could face in the upcoming year follow. Determine each scenario's impact on Solano's

ROI and residual income. $($Note: Treat each scenario independently.$)$ Company sales and cost of goods sold increase by $40$

percent. $($Loss amounts should be indicated with a minus sign. Enter your ROI percentage answer to $2$ decimal places, $($i$.$e$.,$

$0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.$