The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $40 million and having a four-year expected life, after which the assets can be salvaged for $8 million. In addition, the division has $40 million in assets that are not depreciable. After four years, the division will have $40 million available from these nondepreciable assets. This means that the division has invested $80 million in assets with a salvage value of $48 million. Annual depreciation is $8 million. Annual operating cash flows are $27.5 million In computing ROl, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. lgnore 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 End of Year Replacement Cost Annual Cash Flow $ 80,000,000 x 1.1 $88,000,000 $27,500,000 x1.1 $30,250,000 $ 88,000,000 x 1.1 $96,800,000 $ 30,250,000 x 1.1 $ 33,275,000 2 3 4 Etc Etc Depreciation is as follows Year 2 4 For the Year 8,800,000 9,680,000 10,648,000 11,712,800 "Accumulated" $ 8,800,000(-10%x $88,000,000) 19,360,000(-20%x 96,800,000) 31,944,000 46,851,200 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. & b. Compute ROl using historical cost, net book value and gross book value. (Enter your answers as a percentage rounded to1 decimal place (i.e., 32.1).) Historica ROI Cost Net Book Value Gross Book Value Year 1 Year 2 Year 3 Year 4 c. &d. Compute ROl using current cost, net book value and gross book value. (Enter your answers as a percentage rounded to 1 c. & d. Compute ROl using current cost, net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) ROI Current Cost Year 1 Year 2 Year 3 Year 4 Net Book Value Gross Book Value