The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.5 million and having a four-year expected life, after which the assets can be salvaged for $8.1 million. In addition, the division has $40.5 million in assets that are not depreciable. After four years, the division will have $40.5 million available from these non depreciable assets. This means that the division has invested $81 million in assets with a salvage value of $48.6 million. Annual operating cash flows are $12.9 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, jusing 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 ROI Net Book Value % % % % Gross Book Value % % % %
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.5 million and having a four-year expected life, after which the assets can be salvaged for $8.1 million. In addition, the division has $40.5 million in assets that are not depreciable. After four years, the division will have $40.5 million available from these non depreciable assets. This means that the division has invested $81 million in assets with a salvage value of $48.6 million. Annual operating cash flows are $12.9 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, jusing 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 ROI Net Book Value % % % % Gross Book Value % % % %
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 18P
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Question
Rakesh
![The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.5 million and having a
four-year expected life, after which the assets can be salvaged for $8.1 million. In addition, the division has $40.5 million in assets that
are not depreciable. After four years, the division will have $40.5 million available from these non depreciable assets. This means that
the division has invested $81 million in assets with a salvage value of $48.6 million. Annual operating cash flows are $12.9 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
ROI
Net Book Value
%
%
%
%
Gross Book Value
%
%
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F002c76c2-db85-4ce8-8784-847da1c38223%2F5ed3498b-30f2-4b0b-a742-48ffb856b023%2Fakqe6zc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.5 million and having a
four-year expected life, after which the assets can be salvaged for $8.1 million. In addition, the division has $40.5 million in assets that
are not depreciable. After four years, the division will have $40.5 million available from these non depreciable assets. This means that
the division has invested $81 million in assets with a salvage value of $48.6 million. Annual operating cash flows are $12.9 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
ROI
Net Book Value
%
%
%
%
Gross Book Value
%
%
%
%
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