The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $43.5 million and having a four-year expected life, after which the assets can be salvaged for $8.7 million. In addition, the division has $43.5 million in assets that are not depreciable. After four years, the division will have $43.5 million available from these non depreciable assets. This means that the division has invested $87 million in assets with a salvage value of $52.2 million. Annual operating cash flows are $13.5 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. ROI Net Book Value Gross Book Value 6.13 % 5.52 % 6.90 % 5.52 % 7.88 X % 5.52 % 9.20 X % 5.52 %
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $43.5 million and having a four-year expected life, after which the assets can be salvaged for $8.7 million. In addition, the division has $43.5 million in assets that are not depreciable. After four years, the division will have $43.5 million available from these non depreciable assets. This means that the division has invested $87 million in assets with a salvage value of $52.2 million. Annual operating cash flows are $13.5 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. ROI Net Book Value Gross Book Value 6.13 % 5.52 % 6.90 % 5.52 % 7.88 X % 5.52 % 9.20 X % 5.52 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $43.5 million and having a
four-year expected life, after which the assets can be salvaged for $8.7 million. In addition, the division has $43.5 million in assets that
are not depreciable. After four years, the division will have $43.5 million available from these non depreciable assets. This means that
the division has invested $87 million in assets with a salvage value of $52.2 million. Annual operating cash flows are $13.5 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
6.13 X %
6.90 X %
7.88 X %
9.20 X %
ROI
Gross Book Value
5.52 %
5.52 %
5.52
%
5.52 %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F55aa466b-5e90-4c6a-a3a0-45e480e2f25e%2F7789efe8-b923-4a7e-981d-278bce59d5e3%2Fj8wd4od_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $43.5 million and having a
four-year expected life, after which the assets can be salvaged for $8.7 million. In addition, the division has $43.5 million in assets that
are not depreciable. After four years, the division will have $43.5 million available from these non depreciable assets. This means that
the division has invested $87 million in assets with a salvage value of $52.2 million. Annual operating cash flows are $13.5 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
6.13 X %
6.90 X %
7.88 X %
9.20 X %
ROI
Gross Book Value
5.52 %
5.52 %
5.52
%
5.52 %
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