The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.5 million and having afour-year expected life, after which the assets can be salvaged for $75 million. In addition, the division has $375 milion in assets thatare not depreciable. After four years, the division will have $375 million available from these non depreciable assets. This means thatthe division has invested $75 milion in assets with a salvage value of $45.0 million. Annual operating cash flows are $12.3 million. Incomputing ROI, this division uses beginning of year asset values in the denominator. Depreciation is computed on a straight-linebasis, recognizing the salvage values noted. Ignore taxesRequired:a. & b. Compute ROI, using net book value and gross book valueNote: Enter your answers as a percentage rounded to 2 decimal place (ie, 32.10).Year 1Year 2Year 3Your 4Answer is complete but not entirely correct.ROINet Book Value182218 2220.5023 43%%%Gross Book Value16 4015,40 %16.40%16:40

Depreciation is the reduction in the value of asset due tonormal wear and tearEffluxion of…

our-year expected life, after which the assets can be salvaged for $7 we not depreciable. After four years, the division will have $375 millc he division has invested $75 milion in assets with a salvage value of somputing ROI, this division uses beginning of year asset values in th asis, recognizing the salvage values noted Ignore taxes equired: & b. Compute ROI, using net book value and gross book value ote: Enter your answers as a percentage rounded to 2 decimal pla wear 1 Year 2 wear 3 www4 Answer is complete but not entirely correct. ROI Net Book Value 1822 Ⓒ 1822 Ⓒ 20.50 Ⓒ 23430 Gross Book Value 1640 1640 16.40 16:40 Ⓒ

our-year expected life, after which the assets can be salvaged for $7 we not depreciable. After four years, the division will have $375 millc he division has invested $75 milion in assets with a salvage value of somputing ROI, this division uses beginning of year asset values in th asis, recognizing the salvage values noted Ignore taxes equired: & b. Compute ROI, using net book value and gross book value ote: Enter your answers as a percentage rounded to 2 decimal pla wear 1 Year 2 wear 3 www4 Answer is complete but not entirely correct. ROI Net Book Value 1822 Ⓒ 1822 Ⓒ 20.50 Ⓒ 23430 Gross Book Value 1640 1640 16.40 16:40 Ⓒ

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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