One division of the Marvin educational enterprises has depreciable assets costing $5,500,000. The cash flows from these assets for the past three years have been

the current (i.e, replacement) costs of these assets were expected to increase 20% each year. Marvin used the straight line depreciation method the estimated useful life is 10-year with no savage value for return on investment (ROI) calculations, marvin uses end-of-year balances. What is the ROI using current costs and gross book value?

Transcribed Image Text:

Year 2 3 Cash flows $1,595,000 $ 1,870,000 $2,062,500 A 8. C D. Year 1 24.2% 34.5% 17.0% 14.2% Year 2 23.6% 29.4% 19.6% 13.6% Year 3 21.7% 26.7% 20.2% 11.7% Year 2 3 Cash flows $1,595,000 $ 1,870,000 $2,062,500 A 8. C D. Year 1 24.2% 34.5% 17.0% 14.2% Year 2 23.6% 29.4% 19.6% 13.6% Year 3 21.7% 26.7% 20.2% 11.7%

Answer rating: 100% (QA)

ROI using current cost and gross book value Year 1 1595000 550000 120 5500000 120 142 Ye... View the full answer