Homework Answers
Solution 1:
| Return on investment | |||||
| Particulars | Choose Numerator | / | Choose denomerator | = | Return on Investment |
| Formula | Income | / | Average Invested Assets | = | Return on Investment |
| River Division | $329,000.00 | / | $1,170,000.00 | = | 28.12% |
| Stream Division | $516,000.00 | / | $1,530,000.00 | = | 33.73% |
| Compuatation of Residual Income | ||
| Investment Center | River Division | Stream Division |
| Net Income | $329,000.00 | $516,000.00 |
| Target Net Income | $90,792.00 | $118,728.00 |
| Residual Income | $238,208.00 | $397,272.00 |
Solution 2a:
| Return on investment - Operating income increases by 11% | |||||
| Particulars | Choose Numerator | / | Choose denomerator | = | Return on Investment |
| Formula | Income | / | Average Invested Assets | = | Return on Investment |
| River Division | $365,190.00 | / | $1,170,000.00 | = | 31.21% |
| Stream Division | $572,760.00 | / | $1,530,000.00 | = | 37.44% |
| Computation of Residual Income - Operating income increases by 11% | ||
| Investment Center | River Division | Stream Division |
| Net Income | $365,190.00 | $572,760.00 |
| Target Net Income | $90,792.00 | $118,728.00 |
| Residual Income | $274,398.00 | $454,032.00 |
Solution 2b:
| Return on investment - Operating income Decreases by 11% | |||||
| Particulars | Choose Numerator | / | Choose denomerator | = | Return on Investment |
| Formula | Income | / | Average Invested Assets | = | Return on Investment |
| River Division | $292,810.00 | / | $1,170,000.00 | = | 25.03% |
| Stream Division | $459,240.00 | / | $1,530,000.00 | = | 30.02% |
| Compuatation of Residual Income - Operating income Decreases by 11% | ||
| Investment Center | River Division | Stream Division |
| Net Income | $292,810.00 | $459,240.00 |
| Target Net Income | $90,792.00 | $118,728.00 |
| Residual Income | $202,018.00 | $340,512.00 |
Solution 2c:
| Return on investment - New investment of $253,000 | |||||
| Particulars | Choose Numerator | / | Choose denomerator | = | Return on Investment |
| Formula | Income | / | Average Invested Assets | = | Return on Investment |
| River Division | $443,000.00 | / | $1,423,000.00 | = | 31.13% |
| Stream Division | $630,000.00 | / | $1,783,000.00 | = | 35.33% |
| Compuatation of Residual Income - New investment of $253,000 | ||
| Investment Center | River Division | Stream Division |
| Net Income | $443,000.00 | $630,000.00 |
| Target Net Income | $110,424.80 | $138,360.80 |
| Residual Income | $332,575.20 | $491,639.20 |
Solution 2d:
| Return on investment | |||||
| Particulars | Choose Numerator | / | Choose denomerator | = | Return on Investment |
| Formula | Income | / | Average Invested Assets | = | Return on Investment |
| River Division | $329,000.00 | / | $1,170,000.00 | = | 28.12% |
| Stream Division | $516,000.00 | / | $1,530,000.00 | = | 33.73% |
| Compuatation of Residual Income - change in hurdel rate | ||
| Investment Center | River Division | Stream Division |
| Net Income | $329,000.00 | $516,000.00 |
| Target Net Income | $67,392.00 | $88,128.00 |
| Residual Income | $261,608.00 | $427,872.00 |
Add Answer to:
Coolbrook Company has the following information available for the past year: River Division $1,219,000 890,000 Stream...
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales...
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,218,000 $ 1,803,000 Cost of goods sold and operating expenses 887,000 1,297,000 Net operating income $ 331,000 $ 506,000 Average invested assets $ 1,030,000 $ 1,510,000 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. River Division Stream Division ROI % % Residual Income (Loss) 2. Recalculate...
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales...
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,206,000 $ 1,808,000 Cost of goods sold and operating expenses 898,000 1,297,000 Net operating income $ 308,000 $ 511,000 Average invested assets $ 1,150,000 $ 1,460,000 The company’s hurdle rate is 6.01 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...
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales...
Coolbrook Company has the following information available for
the past year:
River Division
Stream Division
Sales revenue
$
1,210,000
$
1,814,000
Cost of goods sold and operating expenses
886,000
1,283,000
Net operating income
$
324,000
$
531,000
Average invested assets
$
1,190,000
$
1,560,000
The company’s hurdle rate is 6.26 percent.
b. Operating income decreases by 8 percent. River Division Stream Division ROI Residual Income (Loss) c. The company invests $248,000 in each division, an amount that generates $108,000 additional...
Coolbrook Company has the following information available for the past year Sales revenue Cost of goods...
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 River Division $ 1,203,000 897,000 $ 306,200 $ 1,070,000 Stream Division $1,806,000 1,290,000 $ 516,000 $1,590,000 The company's hurdle rate is 6.26 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:...
6. value: 10.00 points Coolbrook Company has the following information available for the past year: ...
6.
value:
10.00 points
Coolbrook Company has the following information available for
the past year:
River
Division
Stream Division
Sales revenue
$
1,208,000
$
1,806,000
Cost of goods sold
and operating expenses
883,000
1,287,000
Net operating
income
$
325,000
$
519,000
Average invested
assets
$
1,160,000
$
1,530,000
The company’s hurdle rate is
6.01 percent.
Required:
1.
Calculate return on investment (ROI) and residual income for
each division for last...
Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and opera...
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 River Division $ 1,219,000 894,000 $ 325,000 $ 1,080,000 Stream Division $ 1,812,000 1,285,000 $ 527,000 $ 1,430,000 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. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e.,...
Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods...
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 River Division $1,218,000 89B,000 $ 320,000 $1,130,000 Stream Division $1,812,000 1,291,000 $ 521,000 $1,590,000 The company's hurdle rate is 6.26 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...
PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset,...
PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset, Hurdle Rate on Each [LO 10-4, 10-5] 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 River Division $ 1,200,000 896,000 $ 304,000 $ 1,130,000 Stream Division $ 1,818,000 1,282,000 $ 536,000 $1,580,000 The company's hurdle rate is 7.76 percent. Required: 1. Calculate return on investment (ROI)...
PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested...
PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate on Each (LO 10-4, 10-5) 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 River Division $1,216,000 B80,000 $ 336.000 $1,010,000 Stream Division $1,811.000 1,298.000 $ 511.000 $1,470,000 The company's hurdle rate is 7.26 percent. Required: 1. Calculate return on investment (ROI) and residual...
PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset,...
PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset, Hurdle Rate on Each [LO 10-4, 10-5] Coolbrook Company has the following information available for the past year Stream Division $ 1,808, 1,287,000 River Division S 1,211,000 B87,000 Sales revenue Cost of goods sold and operating expenses 324,000 521,000 Net operating income $ 1,560,000 $ 1,150,000 Average invested assets The company's hurdle rate is 6.76 percent. Required: 1. Calculate retum on investment (ROI) and...
Coolbrook Company has the following information available for
the past year:
River Division
Stream Division
Sales revenue
$
1,210,000
$
1,814,000
Cost of goods sold and operating expenses
886,000
1,283,000
Net operating income
$
324,000
$
531,000
Average invested assets
$
1,190,000
$
1,560,000
The company’s hurdle rate is 6.26 percent.
b. Operating income decreases by 8 percent. River Division Stream Division ROI Residual Income (Loss) c. The company invests $248,000 in each division, an amount that generates $108,000 additional...
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 River Division $ 1,203,000 897,000 $ 306,200 $ 1,070,000 Stream Division $1,806,000 1,290,000 $ 516,000 $1,590,000 The company's hurdle rate is 6.26 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:...
6.
value:
10.00 points
Coolbrook Company has the following information available for
the past year:
River
Division
Stream Division
Sales revenue
$
1,208,000
$
1,806,000
Cost of goods sold
and operating expenses
883,000
1,287,000
Net operating
income
$
325,000
$
519,000
Average invested
assets
$
1,160,000
$
1,530,000
The company’s hurdle rate is
6.01 percent.
Required:
1.
Calculate return on investment (ROI) and residual income for
each division for last...
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 River Division $ 1,219,000 894,000 $ 325,000 $ 1,080,000 Stream Division $ 1,812,000 1,285,000 $ 527,000 $ 1,430,000 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. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e.,...
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 River Division $1,218,000 89B,000 $ 320,000 $1,130,000 Stream Division $1,812,000 1,291,000 $ 521,000 $1,590,000 The company's hurdle rate is 6.26 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...
PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset, Hurdle Rate on Each [LO 10-4, 10-5] 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 River Division $ 1,200,000 896,000 $ 304,000 $ 1,130,000 Stream Division $ 1,818,000 1,282,000 $ 536,000 $1,580,000 The company's hurdle rate is 7.76 percent. Required: 1. Calculate return on investment (ROI)...
PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate on Each (LO 10-4, 10-5) 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 River Division $1,216,000 B80,000 $ 336.000 $1,010,000 Stream Division $1,811.000 1,298.000 $ 511.000 $1,470,000 The company's hurdle rate is 7.26 percent. Required: 1. Calculate return on investment (ROI) and residual...
PA10-1 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Asset, Hurdle Rate on Each [LO 10-4, 10-5] Coolbrook Company has the following information available for the past year Stream Division $ 1,808, 1,287,000 River Division S 1,211,000 B87,000 Sales revenue Cost of goods sold and operating expenses 324,000 521,000 Net operating income $ 1,560,000 $ 1,150,000 Average invested assets The company's hurdle rate is 6.76 percent. Required: 1. Calculate retum on investment (ROI) and...
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