Required: a. & b. Compute ROL, using net book value and gross book value for each year Note: Enter your answers as a percentage rounded to 2 decimal places (.e., 32.10). Year 1 Year 2 3 Year Year 4 ROI Net Book Value Gross Book Value % % %
Required: a. & b. Compute ROL, using net book value and gross book value for each year Note: Enter your answers as a percentage rounded to 2 decimal places (.e., 32.10). Year 1 Year 2 3 Year Year 4 ROI Net Book Value Gross Book Value % % %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 14-45 (Algo) Compare Historical Cost, Net Book Value to Gross Book Value (LO 14-2, 5)
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $43.0 million and having a
four-year expected life, after which the assets can be salvaged for $8.6 million. In addition, the division has $43.0 million in assets that
are not depreciable. After four years, the division will have $43.0 million available from these non depreciable assets. This means that
the division has invested $86 million in assets with a salvage value of $51.6 million. Annual operating cash flows are $13.4 million. In
computing ROI, this division uses end-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 for each year.
Note: Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.10).
Year 1
Year 2
Year 3
Year 4
ROL
Net Book Value Gross Book Value
%
%
%
%
%
%
%
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