Hippie Yoga is a regional chain of yoga studios. Each studios manager has the authority to make investments as needed and is evaluated based largely on ROI. Hippie Yoga Studio 14 reported the following results for the past year.

Sales	$ 500,000
Operating income	40,000
Average operating assets	250,000

The following questions are to be considered independently. Carry out all computations to two decimal places.

1. Compute the studios ROI for the period using the ROI formula stated in terms of margin and turnover.

2. Assume that the manager of the studio is able to increase sales by $50,000 and that as a result operating income increased by $20,000. The operating assets remain unchanged. What would be the studios margin, turnover and ROI be?

3. Assume the manager of the studio is able to reduce expenses by $10,000 without any change in sales or operating assets. What would be the studios margin, turnover and ROI be?

4. Assume that the manager of the studio is able to reduce operating assets by $50,000 without any change in sales or operating income. What would be the studios margin, turnover and ROI be?

5. The Board of Directors of the company has set a minimum required return of 15%. What was the company's residual income last year?