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Coolbrook Company has the following information available for the past year: River...

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Accounting

Coolbrook Company has the following information available for the past year:
River Division Stream Division
Sales revenue $ 1,210,000 $ 1,820,000
Cost of goods sold and operating expenses 887,0001,286,000
Net operating income $ 323,000 $ 534,000
Average invested assets $ 1,140,000 $ 1,530,000
The companys hurdle rate is 7.76 percent.
Required:
Calculate return on investment (ROI) and residual income for each division for last year.
Recalculate ROI and residual income for each division for each independent situation that follows:
Operating income increases by 11 percent.
Operating income decreases by 9 percent.
The company invests $252,000 in each division, an amount that generates $106,000 additional income per division.
Coolbrook changes its hurdle rate to 5.76 percent.

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