Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 7.76 percent. River Division $ 1,201,000 883,000 $ 318,000 $ 1,190,000 Stream Division $ 1,809,000 1,290,000 $ 519,000 $ 1,540,000 Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: Complete this question by entering your answers in the tabs below. a. Operating income increases by 9 percent. b. Operating income decreases by 10 percent. c. The company invests $247,000 in each division, an amount that generates $104,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.76 percent.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Coolbrook Company has the following information available for the past year:
Sales revenue
Cost of goods sold and operating expenses
Net operating income
Average invested assets
The company's hurdle rate is 7.76 percent.
Required:
1. Calculate return on investment (ROI) and residual income for each division for last year.
2. Recalculate ROI and residual income for each division for each independent situation that follows:
Complete this question by entering your answers in the tabs below.
a. Operating income increases by 9 percent.
b. Operating income decreases by 10 percent.
c. The company invests $247,000 in each division, an amount that generates $104,000 additional income per division.
d. Coolbrook changes its hurdle rate to 5.76 percent.
Req 1
Req 2A
Req 2B
ROI
Residual Income (Loss)
Req 2C
River Division
Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle
rate to 5.76 percent.
%
Req 2D
Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.).
Loss amounts should be indicated with a minus sign.
River Division
$ 1,201,000
883,000
$ 318,000
$ 1,190,000
Stream Division
< Req 2C
Stream Division
$ 1,809,000
1,290,000
$ 519,000
$ 1,540,000
%
Req 2D >
Show less A
Transcribed Image Text:Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 7.76 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: Complete this question by entering your answers in the tabs below. a. Operating income increases by 9 percent. b. Operating income decreases by 10 percent. c. The company invests $247,000 in each division, an amount that generates $104,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.76 percent. Req 1 Req 2A Req 2B ROI Residual Income (Loss) Req 2C River Division Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 5.76 percent. % Req 2D Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign. River Division $ 1,201,000 883,000 $ 318,000 $ 1,190,000 Stream Division < Req 2C Stream Division $ 1,809,000 1,290,000 $ 519,000 $ 1,540,000 % Req 2D > Show less A
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