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The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45.5 million and having a four-year expected life, after
The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45.5 million and having a four-year expected life, after which the assets can be salvaged for $9.1 million. In addition, the division has $45.5 million in assets that are not depreciable. After four years, the division will have $45.5 million available from these nondepreciable assets. This means that the division has invested $91.0 million in assets with a salvage value of $54.6 million. Annual depreciation is $9.1 million. Annual operating cash flows are $20.1 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. Required: a. & b. Compute ROI, using net book value and gross book value for each year. (Enter your answers as a percentage rounded to 1 decimal place (1.e., 32.1).) ROI Net Book Value Gross Book Value 96 96 Year 1 Year 2 Year 3 96 96 96 96 Year 4 96 96
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