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The Ste. Marie Division of Pacific Media Corporation just started operations, It purchased depreciable assets costing $42 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 $42 million and having a four-year expected life, after which the assets can be salvaged for 58.4 million. In addition, the division has $42 milion in assets that are not depreciable. After four years, the division will have $42 million available from these nondepreciable assets. This means that the division has invested $84 million in assets with a salvage value of $50.4 million. Annual depreciation is $8.4 million. Annual operating cash flows are $25 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROl. Required: a. & b. Compute ROL using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Net Book Value Gross Book Value Year 1 Year 2 Year 3 Yoar 4
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