The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $$36$ million and having a four$-$year expected life, after which the assets can be salvaged for $$7\mathrm{.}2$ million. In addition, the division has $$36$ million in assets that are not depreciable. After four years, the division will have $$36$ million available from these nondepreciable assets. This means that the division has invested $$72$ million in assets with a salvage value of $$43\mathrm{.}2$ million. Annual operating cash flows are $$12$ 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.

In computing ROI, this division uses end$-$of$-$year asset values. 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

$1$ $$72,000,000\backslash$times $1\mathrm{.}1=$ $$79,200,000$ $$12,000,000\backslash$times $1\mathrm{.}1=$ $$13,200,000$

$2$ $$79,200,000\backslash$times $1\mathrm{.}1=$ $$87,120,000$ $$13,200,000\backslash$times $1\mathrm{.}1=$ $$14,520,000$

$3$ Etc. Etc.

$4$

Depreciation is as follows.

Year For the Year "Accumulated"

$1$ $ $7,920,000$ $$7,920,000(=10\%\backslash$times $$79,200,000)$

$28,712,00017,424,000(=20\%\backslash$times $87,120,000)$

$39,583,20028,749,600$

$410,541,52042,166,080$

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 ROI using historical cost, net book value and gross book value.

c$.$ & d$.$ Compute ROI using current cost, net book value and gross book value.