The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $65 million and having a four-year expected life, after which the assets can be salvaged for $13 million. In addition, the division has $65 million in assets that are not depreciable. After four years, the division will have $65 million available from these nondepreciable assets. This means that the division has invested $130 million in assets with a salvage value of $78 million. Annual depreciation is $13 million. Annual operating cash flows are $32 million. In computing ROI, this division uses end-ofyear asset values in the denominator. Depreciation is computed on a straight-line 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.)