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 $1,209,000 887,000 $ 322,000 $1,050,000 Stream Division $1,805,000 1,300,000 $ 505,000 $1,470,000 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 11 percent. b. Operating income decreases by 10 percent. c. The company invests $246,000 in each division, an amount that generates $119,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.26 percent. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 20 Req 2D Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) River Division 30.67 % ROI Stream Division / 34.35 % $ 412,978 $ Residual Income 256.270 & Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2c Req 2D ---- Recalculate ROI and residual income for each division for the independent situation that follows: Operating income increases by 11 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 ROI % Stream Division 38.13 $ 468,528 34.04 291,690 % Residual Income (Loss) $ Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 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.) ROI Residual Income (Loss) River Division 27.60 % 224,070 Stream Division 30.91 % $ 362,4781 $ Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2c Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: The company invests $246,000 in each division, an amount that generates $119,000 additional income per division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Round your "Residual Income (Loss)" answer to the nearest whole dollars. Loss amounts should be indicated with a minus sign.) Show less ROI River Division 34.03 % 359,870 Stream Division 36.36 % $ 516,578 Residual Income (Loss) $ & Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D ----- Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.26 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.) ROI Residual Income (Loss) River Division 34.03 % 277,270 Stream Division 36.36 % 442,378 $ $
