Return on investment and residual income

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Reference no: EM13777516

Solano Company has sales of $880,000, cost of goods sold of $560,000, other operating expenses of 45,000, average invested assets of $2,550,000, and a hurdle rate of 12 percent.

Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.)

a. Company sales and cost of goods sold increase by 40 percent. (Do not round your intermediate calculations. Round your "Return on Investment" answer to 2 decimal places.)

Return on investment %

Residual income %

Reference no: EM13777516

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