Compute roi using net book value and gross book value

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Question - The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $44.5 million and having a four-year expected life, after which the assets can be salvaged for $8.9 million. In addition, the division has $44.5 million in assets that are not depreciable. After four years, the division will have $44.5 million available from these non--depreciable assets. This means that the division has invested $89.0 million in assets with a salvage value of $53.4 million. Annual depreciation is $8.9 million. Annual operating cash flows are $22.0 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 - Compute ROI, using net book value and gross book value for each year.

Reference no: EM133117323

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