Sales revenue Coolbrook Company has the following information available for the past year: River Division $ 1,215,000 900,000 $ 315,000 $ 1,000,000 Stream Division $ 1,808,000 1,289,000 $ 519,000 $ 1,430,000 Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 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: a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.51 percent. 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. ROI Residual Income (Loss) River Division Stream Division % % Show less▲
Sales revenue Coolbrook Company has the following information available for the past year: River Division $ 1,215,000 900,000 $ 315,000 $ 1,000,000 Stream Division $ 1,808,000 1,289,000 $ 519,000 $ 1,430,000 Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 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: a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.51 percent. 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. ROI Residual Income (Loss) River Division Stream Division % % Show less▲
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sales revenue
Coolbrook Company has the following information available for the past year:
River Division
$ 1,215,000
900,000
$ 315,000
$ 1,000,000
Stream Division
$ 1,808,000
1,289,000
$ 519,000
$ 1,430,000
Cost of goods sold and operating expenses
Net operating income
Average invested assets
The company's hurdle rate is 6.51 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:
a. Operating income increases by 9 percent.
b. Operating income decreases by 11 percent.
c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division.
d. Coolbrook changes its hurdle rate to 4.51 percent.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Req 2B
Req 2C
Req 2D
Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle
rate to 4.51 percent.
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.
ROI
Residual Income (Loss)
River Division
Stream Division
%
%
Show less▲
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