Saved 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 $1,216,000 893,000 $ 323,000 $1,000,000 Stream Division $1,816,000 1,298,000 $ 518,000 $1,600,000 The company's hurdle rate is 7.76 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 9 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $113,000 additional income per division d. Coolbrook changes its hurdle rate to 5.76 percent. Complete this question by entering your answers in the tabs below. Prey 1 of 2 8 Next > Help PA10-3 (Algo) Evaluating Managerial Performance, Proposed Project Impact on Return on Investment, Residual Income (LO 10-4, 10-5) Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets Division A Division B Division C $ 1,295,000 $1,072,000 $ 1,074,000 800,000 787,000 780,000 72,000 60,000 61,000 56,000 49,000 49,000 9,684,000 2,306,000 3,793,000 Wescott is considering an expansion project in the upcoming year that will cost $5.8 million and return $532,000 per year. The project would be implemented by only one of the three divisions. Required: 1. Compute the ROI for each division. 2. Compute the residual income for each division. 3. Rank the divisions according to the ROI and residual income of each 4-a. Compute the return on investment on the proposed expansion project 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROL 6. Compute the new ROI and residual income for each division if the project was implemented within that division