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 $ 1,220,000 883,000 $ 337,000 $ 1,110,000 Stream Division $ 1,807,000 1,298,000 $ 509,000 $ 1,480,000 The company's hurdle rate is 6.51 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 9 percent. c. The company invests $260,000 in each division, an amount that generates $100,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Req 20 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 Stream Division ROI % % Residual Income (Loss) 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 $ 1,220,000 883,000 $ 337,000 $ 1,110,000 Stream Division $ 1,807,000 1,298,000 $ 509,000 $ 1,480,000 The company's hurdle rate is 6.51 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 9 percent. c. The company invests $260,000 in each division, an amount that generates $100,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Req 20 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 Stream Division ROI % % Residual Income (Loss)
