FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Coolbrook Company has the following information available for the past year:
River
Division
Stream
Division
$1,815,000
1,298,000
$517,000
Sales revenue
$1,210,000
883,000
$ 327,000
$1,180,000
Cost of goods sold and operating expenses
Net operating income
Average invested assets
$1,510,000
The company's hurdle rate is 6.76 percent.
Required:
1. Calculate return on investment (ROI) and residual income for each division for last year.
2. Recalculate ROI and residual income for the 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 $253,000 in each division, an amount that generates $101,000 additional income per division.
d. Coolbrook changes its hurdle rate to 4.76 percent.
Complete this auestion hy entering v ur answers in the tabs below.
%24
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Transcribed Image Text:1 Saved Help Coolbrook Company has the following information available for the past year: River Division Stream Division $1,815,000 1,298,000 $517,000 Sales revenue $1,210,000 883,000 $ 327,000 $1,180,000 Cost of goods sold and operating expenses Net operating income Average invested assets $1,510,000 The company's hurdle rate is 6.76 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for the 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 $253,000 in each division, an amount that generates $101,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.76 percent. Complete this auestion hy entering v ur answers in the tabs below. %24
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