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The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.0 million and having a four-year expected life, after which
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.0 million and having a four-year expected life, after which the assets can be salvaged for $7.4 million. In addition, the division has $37.0 million in assets that are not depreciable. After four years, the division will have $37.0 million available from these non depreciable assets. This means that the division has invested $74 million in assets with a salvage value of $44.4 million. Annual operating cash flows are $12.2 million. In computing ROI, this division uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value. Note: Enter your answers as a percentage rounded to 2 decimal place (I.e., 32.10). ROI Net Book Value Gross Book Value Year 1 % % Year 2 % % Year 3 % % Year 4 % %
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