Solano Company has sales of $560,000, cost of goods sold of $400,000, other operating expenses of $53,000, average invested assets of $1,750,000, and a hurdle rate of 8 percent.

Required: 1. Determine Solanos return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)

2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenarios impact on Solanos ROI and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))

a. Company sales and cost of goods sold increase by 40 percent. b. Operating expenses decrease by $12,500. c. Operating expenses increase by 20 percent. d. Average invested assets increase by $330,000. e. Solano changes its hurdle rate to 14 percent.

Return on Investment Investment Turnover Residual Income (Loss)