The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45 million and having a four-year expected life, after which the assets can be salvaged for $9 million. In addition, the division has $45 million in assets that are not depreciable. After four years, the division will have $45 million available from these nondepreciable assets. This means that the division has invested $90 million in assets with a salvage value of $54 million. Annual depreciation is $9 million. Annual operating cash flows are $20 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.

a. Compute ROI, using net book value for each year.

b. Compute ROI, using gross book value for each year.

Refer to the data in Exercise 14-36. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. c. Compute ROI, using net book value.

d. Compute ROI, using gross book value.