The Caribbean Division of Mega-Entertainment Corporation just started operations. It purchased depreciable assets costing $25 million and having a four-year expected life, after which the assets can be salvaged for $5 million. In addition, the division has $25 million in assets that are not depreciable. After four years, the division will have $25 million available from these non-depreciable assets. This means that the division has invested $50 million in assets with a salvage value of $30 million. Annual depreciation is $5 million. Annual operating cash flows are $17.5 million. In computing ROI, this division uses end-of-year 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:

Replacement Cost $50,000,000 x11 = $55,000,000 $55,000,000 x11 = $60,500,000 Etc. End of Year Annual Cash Flow 2 3 4 $17,500,000 $19,250,000 1.1 = $19,250,000 1.1 = $ 21,175,000 Etc. Depreciation is as follows Year For the Year "Accumulated" 1 $5,500,000 $ 5,500,000 $55,000,000) (= 20% x 60,500,000) 2 6,050,000 12,100,000 3 6,655,000 19,965,000 4 7,320,500 29,282,000 Note that "accumulated" depreciation is 10 percent of the gross book value of depreciable assets after one year, 20 percent after two years, and so forth. Required (a)Compute ROl using historical cost, net book value and gross book value. (Do not round intermediate calculations. Round your answers to 1 decimal place.) ROI - Gross book value Historical cost Year 1 Year 2 Year 3 Year 4 value (%)