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PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset, Hurdle Rate on Each ILO 10-4, 10-5) Coolbrook Company

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PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset, Hurdle Rate on Each ILO 10-4, 10-5) Coolbrook Company has the following information available forthe past year: River Division Stream Division Sales revenue 200,000 800,000 Cost of goods sold and operating expenses 900,000 1,300,000 300,000 500,000 Net operating income Average invested assets 200,000 800,000 The company's hurdle rate is 6 percent. Required 1. Calculate return on investment (RO) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (ie 0.1234 should be entered as 12.34%.) River Division Stream Division ROI Residual Income (Loss) 2. Recalculate ROI and residual income for each division for each independent situation that follows: (Enter your ROl answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)

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