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 afour-year expected life, after which the assets can be salvaged for $8.0 million. In addition, the division has $40.0 million in assets thatare not depreciable. After four years, the division will have $40.0 million available from these non depreciable assets. This means thatthe division has invested $80 million in assets with a salvage value of $48.0 million. Annual operating cash flows are $12.8 million. Incomputing 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 1Year 2Year 3Year 4Net Book Value%%%%ROIGross Book Value%%%%

The gross book value is the acquisition cost or historical cost of assets shown on the financial…

Answered: Required: a. & b. Compute ROI, using…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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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