Sales, Expenses, Invested Assets, Hurdle Rate on Each $[$LO $10-4,10-5]$

Kaler Company has sales of $$1,270,000,$ cost of goods sold of $$750,000,$ other operating expenses $$163,000,$ average invested

assets of $$3,700,000,$ and a hurdle rate of $12$ percent.

Required:

Determine Kaler's return on investment $($ROI$),$ investment turnover, profit margin, and residual income.

Several possible changes Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and

residual income. $($Note: Treat each scenario independently.$)$

a$.$ Company sales and cost of goods sold increase by $15$ percent.

b$.$ Operating expenses increase by $$76,000.$

c$.$ Operating expenses decrease by $20$ percent.

d$.$ Average invested assets decrease by $$315,000.$

e$.$ Kaler changes its hurdle rate to $9$ percent.

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