Solano Company has sales of $$860,000,$ cost of goods sold of $$550,000,$ other operating expenses of $$50,000,$ average invested assets of $$2,500,000,$ and a hurdle rate of $12$ percent.

Required:

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

Several possible changes that Solano could face in the upcoming year follow. Determine each scenario$$s impact on Solano$$s ROI and residual income. $($Note: Treat each scenario independently.$)$

Company sales and cost of goods sold increase by $30$ percent.

Operating expenses decrease by $$13,000.$

Operating expenses increase by $20$ percent.

Average invested assets increase by $$480,000.$

Solano changes its hurdle rate to $18$ percent.