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Need assistance with parts 2A - 2D. PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle
Need assistance with parts 2A - 2D.
PA10-1 (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) Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets River Division $1,208,000 883,000 $ 325,000 $1,030,000 Stream Division $1,811,000 1,288,000 $ 523,000 $1,450,000 The company's hurdle rate is 6.26 percent. Required: 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 9 percent. b. Operating income decreases by 10 percent. c. The company invests $259,000 in each division, an amount that generates $113,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.26 percent. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Reg 2B Req 2c Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 10 percent. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign.) River Division % Stream Division % ROI Residual Income (Loss)Step by Step Solution
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