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Veach Division has total assets (net of accumulated depreclation) of ( $ 469,000 ) at the beginning of year 1 . One of the assets
Veach Division has total assets (net of accumulated depreclation) of \\( \\$ 469,000 \\) at the beginning of year 1 . One of the assets is a machine that has a net book value of \\( \\$ 49,000 \\). Now, assume that Veach has been leasing this machine for \\( \\$ 7,900 \\) annually. Expected divisional Income In year 1 is \\( \\$ 55,440 \\) Including \\( \\$ 2,940 \\) In Income generated by the leased machine (after the lease payment). Veach's cost of capital is 10.7 percent. Veach can cancel the lease on the machine without penalty at any time. Required: a. Veach computes ROI using beginning-of-the-year net assets. What will the divIsional ROI be for year 1 assuming Veach retalns the lease on the machine? Note: Enter your answer as a percentage rounded to 1 decimal place (l.e., 32.1). b. What would divisional ROI be for year 1 assuming Veach cancels the lease on the machine? Note: Enter your answer as a percentage rounded to 1 decimal place (I.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 retalns the lease on the machine? d. What would divisional residual Income be for year 1 assuming Veach cancels the lease on the machine
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