The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $54 million and having a four-year expected life, after which the assets can be salvaged for $10.8 million. In addition, the division has $54 million in assets that are not depreciable. After four years, the division will have $54 million available from these nondepreciable assets. This means that the division has invested $108 million in assets with a salvage value of $64.8 million. Annual depreciation is $10.8 million. Annual operating cash flows are $25 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. Required: a. & b. Compute ROI, using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $54 million and having a four-year expected life, after which the assets can be salvaged for $10.8 million. In addition, the division has $54 million in assets that are not depreciable. After four years, the division will have $54 million available from these nondepreciable assets. This means that the division has invested $108 million in assets with a salvage value of $64.8 million. Annual depreciation is $10.8 million. Annual operating cash flows are $25 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. Required: a. & b. Compute ROI, using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

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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