Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate
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Question:
Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate on Each LO
Coolbrook Company has the following information available for the past year:
River Division Stream Division
Sales revenue $ $
Cost of goods sold and operating expenses
Net operating income $ $
Average invested assets $ $
The companys hurdle rate is 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 percent.
Operating income decreases by percent.
The company invests $ in each division, an amount that generates $ additional income per division.
Coolbrook changes its hurdle rate to percent.
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