The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $$47$ million and having a four$-$year expected life, after which the assets can be salvaged for $$9\mathrm{.}4$ million. In addition, the division has $$47$ million in assets that are not depreciable. After four years, the division will have $$47$ million available from these nondepreciable assets. This means that the division has invested $$94$ million in assets with a salvage value of $$56\mathrm{.}4$ million. Annual operating cash flows are $$18$ million. In computing ROI, this division uses$$end$-$of$-$year$$asset values in the denominator. Depreciation is computed on a straight$-$line basis, recognizing the salvage values noted. Ignore taxes.

Assume that the company uses an $11$ percent cost of capital.

Required:

Compute residual income, using net book value for each year.

Compute residual income, using gross book value for each year.