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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

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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 Required a Compute ROl, using net book value for each year b. Compute ROL, using gross book value for each year 37. Compare ROl Using Net Book and Gross Book Values (LO 14-2, 5) Refer to the data in Exercise 14-36. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI Required a Compute ROI, using net book value b Compute ROI, using gross book value c If you worked Exercise 14-36, compare those results with those in this exercise. How different the ROl computed using end-of-year asset values, as in Exercise 14-36, from the ROI using inning-of-year values in this exercise? 14-38. Compare Current Cost to Historical Cost LO 14-2. 5)

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