Solano Company has sales of $840,000, cost of goods sold of $540,000, other operating expenses of $70,000, average invested assets of $2,450,000, and a hurdle rate of 11 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.) Return on Investment Turnover= __%

Investment Turnover

Profit Margin= __ %

Residual Income (Loss)= 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.

Return on Investment= __ %

Residual Income (Loss)=

b. Operating expenses decrease by $12,000.

Return on Investment= __ %

Residual Income (Loss)=

c. Operating expenses increase by 10 percent.

Return on Investment= __ %

Residual Income (Loss)=

d. Average invested assets increase by $470,000.

Return on Investment= __ %

Residual Income (Loss)=

e. Solano changes its hurdle rate to 17 percent. Return on Investment= __ %

Residual Income (Loss)=