Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Veach Division has total assets ( net of accumulated depreclation ) of $ 4 6 2 , 0 0 0 at the beginning of year

image text in transcribed
Veach Division has total assets (net of accumulated depreclation) of $462,000 at the beginning of year 1. One of the assets is a machlne that has a net book value of $45,360. Expected divisional income In year 1 is $55,440 Including $2,940 In Income generated by the machine (after depreclation). Veach's cost of capltal is 10 percent. Veach is considering disposing of the asset today (the beginning of year 1).
Required:
a. Veach computes ROI using beginning-of-the-year net assets. What will the divisional ROI be for year 1 assuming Veach retains the asset?
b. What would divisional ROI be for year 1 assuming Veach disposes of the asset for its book value and there is no galn or loss on the sale?
Note: Enter your answer as a percentage rounded to 1 decimal place (1.e.,32.1).
c. Veach computes residual Income using beginning-of-the-year net assets. What will the divisional residual Income be for year 1 assuming Veach retains the asset?
d. What would divislonal residual Income be for year 1 assuming Veach disposes of the asset for its book value and there is no galn or loss on the sale?
\table[[a. ROI before disposal,12Q
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting A Contemporary Approach

Authors: David Haddock, John Price, Michael Farina

4th edition

978-1259995057, 1259995054, 978-0077503987, 77503988, 978-0077639730

More Books

Students also viewed these Accounting questions