Refer to the data in Exercise 14-36. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI.

Required
a. Compute ROI, using net book value.
b. Compute ROI, using gross book value.
c. If you worked Exercise 14-36, compare those results with those in this exercise. How different is the ROI computed using end-of-year asset values, as in Exercise 14-36, from the ROI using beginning-of-year values in this exercise?

Data From Exercise 14-36:

The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45 million and having a four-year expected life, after which the assets can be salvaged for $9 million. In addition, the division has $45 million in assets that are not depreciable. After four years, the division will have $45 million available from these nondepreciable assets. This means that the division has invested $90 million in assets with a salvage value of $54 million. Annual depreciation is $9 million. Annual operating cash flows are $20 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.