The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $45.5 million and having a four-year expected life, after which the assets can be salvaged for $9.1 million. In addition, the division has $45.5 million in assets that are not depreciable. After four years, the division will have $45.5 million available from these non depreciable assets. This means that the division has invested $91 million in assets with a salvage value of $54.6 million. Annual operating cash flows are $13.9 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 % % % % % % % %
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $45.5 million and having a four-year expected life, after which the assets can be salvaged for $9.1 million. In addition, the division has $45.5 million in assets that are not depreciable. After four years, the division will have $45.5 million available from these non depreciable assets. This means that the division has invested $91 million in assets with a salvage value of $54.6 million. Annual operating cash flows are $13.9 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 % % % % % % % %
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
$45.5 million and having a four-year expected life, after which the assets can be salvaged for $9.1 million.
In addition, the division has $45.5 million in assets that are not depreciable. After four years, the division
will have $45.5 million available from these non depreciable assets. This means that the division has
invested $91 million in assets with a salvage value of $54.6 million. Annual operating cash flows are $13.9
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
%
%
%
%
%
se
%
%
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