Required: a. & b. Compute ROI, using net book value and gross book value. Note: Enter your answers as a percentage rounded to 2 decimal place (i.e., 32.10).
Required: a. & b. Compute ROI, using net book value and gross book value. Note: Enter your answers as a percentage rounded to 2 decimal place (i.e., 32.10).
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter13: Financial Statement Analysis
Section: Chapter Questions
Problem 13.3P
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![Exercise 14-46 (Algo) Compare ROI Using Net Book and Gross Book Values (LO 14-2, 5)
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.0 million and having a
four-year expected life, after which the assets can be salvaged for $8.0 million. In addition, the division has $40.0 million in assets that
are not depreciable. After four years, the division will have $40.0 million available from these non depreciable assets. This means that
the division has invested $80 million in assets with a salvage value of $48.0 million. Annual operating cash flows are $12.8 million. In
computing ROI, this division uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line basis,
recognizing the salvage values noted. Ignore taxes.
Required:
a. & b. Compute ROI, using net book value and gross book value.
Note: Enter your answers as a percentage rounded to 2 decimal place (i.e., 32.10).
Year 1
Year 2
Year 3
Year 4
Net Book Value
%
%
%
%
ROI
Gross Book Value
%
%
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3eaabca7-e242-4401-b0e2-f0593dd35474%2F949221cb-1b0e-4f53-973f-c4e3fd0672ce%2Fe59rvuf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 14-46 (Algo) Compare ROI Using Net Book and Gross Book Values (LO 14-2, 5)
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.0 million and having a
four-year expected life, after which the assets can be salvaged for $8.0 million. In addition, the division has $40.0 million in assets that
are not depreciable. After four years, the division will have $40.0 million available from these non depreciable assets. This means that
the division has invested $80 million in assets with a salvage value of $48.0 million. Annual operating cash flows are $12.8 million. In
computing ROI, this division uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line basis,
recognizing the salvage values noted. Ignore taxes.
Required:
a. & b. Compute ROI, using net book value and gross book value.
Note: Enter your answers as a percentage rounded to 2 decimal place (i.e., 32.10).
Year 1
Year 2
Year 3
Year 4
Net Book Value
%
%
%
%
ROI
Gross Book Value
%
%
%
%
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