PA$10-1($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:

River Division Stream Division

Sales revenue $ $1,212,000$ $ $1,811,000$

Cost of goods sold and operating expenses $883,0001,289,000$

Net operating income $ $329,000$ $ $522,000$

Average invested assets $ $1,070,000$ $ $1,450,000$

The company$$s hurdle rate is $7\mathrm{.}51$ percent.

Required:

Calculate return on investment $($ROI$)$ and residual income for each division for last year.

Recalculate ROI and residual income for each division for each independent situation that follows:

Operating income increases by $12$ percent.

Operating income decreases by $9$ percent.

The company invests $$256,000$ in each division, an amount that generates $$102,000$ additional income per division.

Coolbrook changes its hurdle rate to $5\mathrm{.}51$ percent. req $1$ Calculate return on investment $($ROI$)$ and residual income for each division for last year.

Note: Enter your ROI answers as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.)$

River Division Stream Division

ROI $\%\%$

Residual Income $($Loss$)$

reg $2$A Recalculate ROI and residual income for each division for the independent situation that follows: Operating income increases by $12$ percent.

Note: Enter your ROI answers as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.).$ Loss amounts should be indicated with a minus sign.

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River Division Stream Division

ROI $\%\%$

Residual Income $($Loss$)$

Reg $2$B bRecalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by $9$ percent.

Note: Enter your ROI answers as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.).$ Loss amounts should be indicated with a minus sign.

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River Division Stream Division

ROI $\%\%$

Residual Income $($Loss$)$ Reg

$2$C Recalculate ROI and residual income for each division for the independent situation that follows: The company invests $$256,000$ in each division, an amount that generates $$102,000$ additional income per division.

Note: Enter your ROI answers as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.).$ Round your "Residual Income $($Loss$)"$ answer to the nearest whole dollars. Loss amounts should be indicated with a minus sign.

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River Division Stream Division

ROI $\%\%$

Residual Income $($Loss$)$

Reg $2$D Recalculate ROI and residual income for each division for the independent situation that follows: The company invests $$256,000$ in each division, an amount that generates $$102,000$ additional income per division.

Note: Enter your ROI answers as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.).$ Round your "Residual Income $($Loss$)"$ answer to the nearest whole dollars. Loss amounts should be indicated with a minus sign.

Show less

River Division Stream Division

ROI $\%\%$

Residual Income $($Loss$)$