Problem 14-57 (Algo) Compare Historical, Net Book Value to Gross Book Value, Residual Income (L0 14- 3, 5) The Ste. Marie Division of Pacic Media Corporationjust started operations. It purchased depreciable assets costing $100 million and having a foureyear expected life, after which the assets can be salvaged for $20 million. In addition, the division has $100 million in assets that are not depreciable. After four years, the division will have $100 million available from these nondepreciable assets. This means that the division has invested $200 million in assets with a salvage value of $120 million. Annual depreciation is $20 million. Annual operating cash flows are $53 million. In computing ROI, this division uses endofyear asset values in the denominator. Depreciation is computed on a straightline basis, recognizing the salvage values noted. Ignore taxes. Assume that the company uses a 12 percent cost of capital. Required: a. Compute residual income, using net book value for each year. b. Compute residual income, using gross book value for each year. (Enter your answers in thousands of dollars.) Exercise 14-26 (Algo) ROI versus RI {LO 14-2, 3) A division is considering the acquisition of a new asset that will cost $2,840,000 and have a cash flow of $710,000 per year for each of the four years of its life. Depreciation is computed on a straightline basis with no salvage value. Ignore taxes. Required: a. 8: b. What is the ROI for each year of the asset's life if the division uses beginningrofeyear asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent? (Enter "ROI" answers as a percentage rounded to1 decimal place li.e.. 32.1}. Negative amounts should be indicated by a minus sign.)