The St. Blue division of Roselli Company just purchased an asset for $210,000. The asset has a three-year life. Rosellis top management evaluates FreidaSchmidt, manager of the St. Blue division, based on her division's ROI. She can choose to measure her assets using either gross asset value or net asset value. Her operating income before depreciation each year is $140,000.

Requirement 1. What is the St. Blue division's ROI for each of the three years using the gross asset value?

Begin by selecting the formula and then enter the amounts to calculate the ROI for each year using the gross asset value. (Round your answers to the nearest whole percentage, X%.)

/

=

ROI

Year 1		/		=		%
Year 2		/		=		%
Year 3		/		=		%

Requirement 2. What is the

St. BlueSt. Blue

division's ROI for each of the three years using the net asset value?

Select the formula and then enter the amounts to calculate the ROI for each year using the net asset value. (Round your answers to the nearest wholepercentage, X%.)

/

=

ROI

Year 1		/		=		%
Year 2		/		=		%
Year 3		/		=		%

Requirement 3. If Schmidt expects Roselli to transfer her to a different division in about a year, which asset valuation policy would she prefer?

A.Schmidt would prefer the gross book value because the ROI is consistent each year.

B.Schmidt would prefer the gross book value because it always give a lower ROI.

C.Schmidt might prefer the net book value because it always gives a higher ROI.

D.Most likely that Schmidt would be indifferent about the asset valuation policy since she will be transferred to a different division in about a year.