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 $ 1,210,000 896,000 $ 314,000 $ 1,110,000 Stream Division $ 1,816,000 1,294,000 $ 522,000 $ 1,520,000 The company's hurdle rate is 7.51 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 12 percent. b. Operating income decreases by 10 percent. c. The company invests $241,000 in each division, an amount that generates $110,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.51 percent. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Reg 2C 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 % Stream Division % ROI Residual Income (Loss) Reg 1 Reg 2A Reg 2B Reg 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Operating income increases by 12 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) Reg 1 Req 2A Reg 2B Reg 20 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) Reg 1 Reg 2A Req 2B Req 2c Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: The company invests $241,000 in each division, an amount that generates $110,000 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 Stream Division River Division % ROI Residual Income (Loss) Reg 1 Reg 2A Reg 2B Reg 20 Reg 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 5.51 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.) Stream Division River Division % ROI Residual Income (Loss)
