The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.5 million and having a four-year expected life, after which the assets can be salvaged for $7.5 million. In addition, the division has $37.5 million in assets tha are not depreciable. After four years, the division will have $37.5 million available from these non depreciable assets. This means tha the division has invested $75 million in assets with a salvage value of $45.0 million. Annual operating cash flows are $12.3 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). ROI Net Book Value Gross Book Value Year 1 % % Year 2 % 000 % Year 3 % % Year 4 % %
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.5 million and having a four-year expected life, after which the assets can be salvaged for $7.5 million. In addition, the division has $37.5 million in assets tha are not depreciable. After four years, the division will have $37.5 million available from these non depreciable assets. This means tha the division has invested $75 million in assets with a salvage value of $45.0 million. Annual operating cash flows are $12.3 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). ROI Net Book Value Gross Book Value Year 1 % % Year 2 % 000 % Year 3 % % Year 4 % %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.5 million and having a
four-year expected life, after which the assets can be salvaged for $7.5 million. In addition, the division has $37.5 million in assets tha
are not depreciable. After four years, the division will have $37.5 million available from these non depreciable assets. This means tha
the division has invested $75 million in assets with a salvage value of $45.0 million. Annual operating cash flows are $12.3 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).
ROI
Net Book Value Gross Book Value
Year 1
%
%
Year 2
%
000
%
Year 3
%
%
Year 4
%
%
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