Solution-Compute roi using net book value and gross book

Compute roi using net book value and gross book value

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Reference no: EM131912855

The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $50.0 million and having a four-year expected life, after which the assets can be salvaged for $10.0 million. In addition, the division has $50.0 million in assets that are not depreciable. After four years, the division will have $50.0 million available from these nondepreciable assets. This means that the division has invested $100.0 million in assets with a salvage value of $60.0 million. Annual depreciation is $10.0 million. Annual operating cash flows are $21.0 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.

Compute ROI, using net book value and gross book value for each year.

Reference no: EM131912855

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Compute roi using net book value and gross book value

Reference no: EM131912855

Reference no: EM131912855

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