4.

Gandolfi Construction Co. purchased a used CAT 336DL earth mover at a cost of $445,000 in January 2013. The companys estimated useful life of this heavy equipment is 10 years, and the estimated salvage value is $87,000.

Assume that Gandolfi Construction Co. calculated depreciation expense for the CAT 336DL earth mover on the straight-line method and reported $511,200 of net income for the year ended December 31, 2013. The companys average total assets for 2013 were $3,600,000.

Required:

a.	Calculate Gandolfis ROI for the year ended December 31, 2013.

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Choose Denominator

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ROI

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b.

Calculate what Gandolfis ROI would have been for the year ended December 31, 2013, had the company used the double-declining-balance depreciation method for the CAT 336DL earth mover.

Choose Numerator	/	Choose Denominator	=	ROI
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