Coolbrook company has the following information available for the past year: (Chart in photo below) Required: 1. calculate return on Investment (ROI) and residual income for each divison for the last year 2. Recalculate ROI and residual income for the division for each independent situration that follows: a.) operating income increases by 9 percent b.) operating Income decreases by 9 percent c.) The company invests 255,000 in each division, an amount that generates 106,000 additional income per division. d.) Coolbrook changes its hurdle rate to 5.26 percent
Coolbrook company has the following information available for the past year: (Chart in photo below) Required: 1. calculate return on Investment (ROI) and residual income for each divison for the last year 2. Recalculate ROI and residual income for the division for each independent situration that follows: a.) operating income increases by 9 percent b.) operating Income decreases by 9 percent c.) The company invests 255,000 in each division, an amount that generates 106,000 additional income per division. d.) Coolbrook changes its hurdle rate to 5.26 percent
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Coolbrook company has the following information available for the past year:
(Chart in photo below)
Required:
1. calculate
2. Recalculate ROI and residual income for the division for each independent situration that follows:
a.) operating income increases by 9 percent
b.) operating Income decreases by 9 percent
c.) The company invests 255,000 in each division, an amount that generates 106,000 additional income per division.
d.) Coolbrook changes its hurdle rate to 5.26 percent
Transcribed Image Text:Coolbrook Company has the following information available for the past year:
River
Division
$1,208,000
893,000
Stream
Division
$1,820,000
1,294,000
Sales revenue
Cost of goods sold and operating expenses
Net operating income
315,000
526, 000
Average invested assets
$ 1,040,000
$ 1,490,000
The company's hurdle rate is 7.26 percent.
%24
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