Question
One division of the Marvin Educational Enterprises has depreciable assets costing $4,200,000. The cash flows from these assets for the past three years have been:
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One division of the Marvin Educational Enterprises has depreciable assets costing $4,200,000. The cash flows from these assets for the past three years have been:
Year Cash flows 1 $ 1,344,000 2 $ 1,554,000 3 $ 1,743,000
The current (i.e., replacement) costs of these assets were expected to increase 20% each year. Marvin used the straight-line depreciation method and the estimated useful life is 10-years with no salvage value. For return on investment (ROI) calculations, Marvin uses end-of-year balances. What is the ROI using current costs and gross book value?
Year 1 Year 2 Year 3 A. 26.7 % 25.7 % 24.0 % B. 31.3 % 27.0 % 24.1 % C. 20.0 % 22.6 % 24.2 % D. 16.7 % 15.7 % 14.0 %
Option B
Option C
Option A
Option D
One division of the Marvin Educational Enterprises has depreciable assets costing $4,200,000. The cash flows from these assets for the past three years have been:
| Year | Cash flows | |||
| 1 | $ | 1,344,000 | ||
| 2 | $ | 1,554,000 | ||
| 3 | $ | 1,743,000 | ||
The current (i.e., replacement) costs of these assets were expected to increase 20% each year. Marvin used the straight-line depreciation method and the estimated useful life is 10-years with no salvage value. For return on investment (ROI) calculations, Marvin uses end-of-year balances. What is the ROI using current costs and gross book value?
| Year 1 | Year 2 | Year 3 | ||||||
| A. | 26.7 | % | 25.7 | % | 24.0 | % | ||
| B. | 31.3 | % | 27.0 | % | 24.1 | % | ||
| C. | 20.0 | % | 22.6 | % | 24.2 | % | ||
| D. | 16.7 | % | 15.7 | % | 14.0 | % | ||
| Option B | ||
| Option C | ||
| Option A | ||
| Option D |
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen, Peter Brewer
16th edition
978-1259307416
