6 Oc Clemente is the manager of Fortes Division of Platine, a montacturer of biotech products Forbes Division which has $4.05 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5.09 million in automated equipment for test machine assembly. The divisions expected income statement at the beginning of the year was as follows 16,010, Sales reme Operating costs il cash Deore 2.18, 1,660,000 Other Dieting profit 5. A ce privetrom LS Machine Company approached Oscar in October LSi has for $615 million a new assembly machine that others can provements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division by 10 percent while reducing cash red costs by 5 percent. It would be depreciated for accounting purposes over the year. Depreciation would be net of the $597000 Slage value of the new machine. The new equipment meets P12 percent out of calcio Osco purchases the new machine, it must be installed pior to the end of the year For practical purposes, though Oscar con onore depreciation on the new made because it will not go into operation until the start of the next yen The machine was no savage value the disposed of to make room for the new machine pats apunane valution and bon plan based on real income Ples a cost of capital of 12 percent in computing resincome includes any losses on disposal of equipment Investment computed based on the end of year balance of Required: 6. What is Forbes Division's residual income it Oscar does not acquire the new machine? b. What is Forbes Division's residual income this year if Oscar acquires the new machine? c. Oscar acquires the new machine and operates it according to specifications, what residual income is expected for next year? (Enter your answers in thousands of dollars. Negative amounts should be indicated by a minus sign. Round your answers to the nearest whole dollars) Residan income Hasil com Rosidust income Saved Help Save & E Check The Ste Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing 540 million and having a four year expected life, after which the assets can be salvaged for $8 million. In addition, the division has $40 million in assets that are not depreciable. After four years, the division will have $40 million available from these nondepreciable assets. This means that the division has invested $80 million in assets with a salvage value of $48 million Annual depreciation is $8 milion Annual operating cash flows are $22.5 million. In computing ROI, this division uses end of yew asset values in the denominator Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that all cash flows increase 10 percent at the end of each year. This has the following effect on the assets replacement cost and annual cash flows End of Year placement Cost dual cast How $ 30,000,000 X 1.1 $88,000,000 $ 22,500,000 1.1 - $24,750,000 $ 88,000,000 1.1 - 356,800,000 5 24,750,000 1.1-527,225,600 Ete Etc Depreciation is as follows Year 1 2 3 4 For the Year $ 8,500,000 9.600,000 10,648,000 11,712,800 Accumulated $ 3,600,000 (188,000,000) 19,360.000 (30394,000,000) 31,140,000 $6,051,200 Note that accumulated depreciation is 10 percent of the gross book value of depreciable assets after one year 20 percenter years, and so forth Complete this question by entering your answers in the tabs below. 1 Reg A and B Reg C and D at Compute ROI using current cost, net book value and gross book value. (Enter your answers as a percentage rounded to decimal place 2.1).) ces ROI Net Book Value Gross Book Value Current Cost Year 1 Year 2 Year 3 Year 4 ER