se Logistics just started operations. It purchased depreciable assets costing $38.5 milli which the assets can be salvaged for $7.7 million. In addition, the division has $38.5 mi r years, the division will have $38.5 million available from these non depreciable asset million in assets with a salvage value of $46.2 million. Annual operating cash flows are ses beginning-of-year asset values in the denominator. Depreciation is computed on a es noted. Ignore taxes.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $38.5 million and having a
four-year expected life, after which the assets can be salvaged for $7.7 million. In addition, the division has $38.5 million in assets that
are not depreciable. After four years, the division will have $38.5 million available from these non depreciable assets. This means that
the division has invested $77 million in assets with a salvage value of $46.2 million. Annual operating cash flows are $12.5 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
> Answer is complete but not entirely correct.
Net Book Value
32.47 %
40.58 X %
54.11 X %
81.17
%
ROI
Gross Book Value
16.23 %
18.29 X %
20.83
%
22.73
%
Transcribed Image Text:The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $38.5 million and having a four-year expected life, after which the assets can be salvaged for $7.7 million. In addition, the division has $38.5 million in assets that are not depreciable. After four years, the division will have $38.5 million available from these non depreciable assets. This means that the division has invested $77 million in assets with a salvage value of $46.2 million. Annual operating cash flows are $12.5 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 > Answer is complete but not entirely correct. Net Book Value 32.47 % 40.58 X % 54.11 X % 81.17 % ROI Gross Book Value 16.23 % 18.29 X % 20.83 % 22.73 %
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