Year 2016 2017 2018 2019 2020 2021 2022 Index 82 84 89 94 96 100 Cost $ 1,000,000 1,000,000 1,100,000 1,150,000 1,200,000 1,250,000 1,300,000 Health Care $ 800,000 800,000 600,000 600,000 700,000 700,000 600,000 Cosmetics $ 800,000 800,000 600,000 700,000 800,000 800,000 900,000 Required: (Round your answers to 2 decimal places.) 1. Compute return on investment (ROI) for each division using the historical cost of divisional assets (including current assets) as the investment base. 2. Compute ROI for each division, incorporating current-cost estimates as follows: a. Gross book value (GBV) of long-lived assets plus book value of current assets. b. GBV of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round intermediate calculations. Round dollar values to the nearest whole dollar.) c. Net book value (NBV) of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round intermediate calculations. Round dollar values to the nearest whole dollar.) d. Current replacement cost of long-lived assets plus book value of current assets. e. Current liquidation value of long-lived assets plus book value of current assets. 1. Return on investment based on historical cost of divisional assets 2a. Return on investment based on gross book value 2b Return on investment based on gross book value at current cost 2c. Return on investment based on net book value at current cost 2d. Return on investment based on current replacement cost 2e. Return on investment based on current liquidation value Health Care % % % % % Cosmetics % % % % % %
Year 2016 2017 2018 2019 2020 2021 2022 Index 82 84 89 94 96 100 Cost $ 1,000,000 1,000,000 1,100,000 1,150,000 1,200,000 1,250,000 1,300,000 Health Care $ 800,000 800,000 600,000 600,000 700,000 700,000 600,000 Cosmetics $ 800,000 800,000 600,000 700,000 800,000 800,000 900,000 Required: (Round your answers to 2 decimal places.) 1. Compute return on investment (ROI) for each division using the historical cost of divisional assets (including current assets) as the investment base. 2. Compute ROI for each division, incorporating current-cost estimates as follows: a. Gross book value (GBV) of long-lived assets plus book value of current assets. b. GBV of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round intermediate calculations. Round dollar values to the nearest whole dollar.) c. Net book value (NBV) of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round intermediate calculations. Round dollar values to the nearest whole dollar.) d. Current replacement cost of long-lived assets plus book value of current assets. e. Current liquidation value of long-lived assets plus book value of current assets. 1. Return on investment based on historical cost of divisional assets 2a. Return on investment based on gross book value 2b Return on investment based on gross book value at current cost 2c. Return on investment based on net book value at current cost 2d. Return on investment based on current replacement cost 2e. Return on investment based on current liquidation value Health Care % % % % % Cosmetics % % % % % %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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