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Harbor Division has total assets (net of accumulated depreciation) of $760,000 at the beginning of year 1. One of the assets is a machine that
Harbor Division has total assets (net of accumulated depreciation) of $760,000 at the beginning of year 1. One of the assets is a machine that has a net book value of $59,000. Expected divisional income in year 1 is $91,000 including $5,500 in income generated by the machine (after depreciation). Harbor's cost of capital is 9 percent. Harbor is considering disposing of the asset today (the beginning of year 1) Required a. Harbor computes ROI using beginning-of-the-year net assets. What will the divisional ROl be for year 1 assuming Harbor retains the asset? (Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).) ROl before disposal b. What would divisional ROI be for year 1 assuming Harbor disposes of the asset for its book value (there is no gain or loss on the sale)? (Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).) ROI after disposal c. Harbor computes residual income using beginning-of-the-year net assets. What will the divisional residual income be for year 1 assuming Harbor retains the asset? esidual income before disposal d. What would divisional residual income be for year 1 assuming Harbor disposes of the asset for its book value (there is no gain or loss on the sale)? Residual income after disposal
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