Exercise 14-23 ROI versus RI (LO 14-2, 3)

A division is considering the acquisition of a new asset that will cost $740,000 and have a cash flow of $284,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes.

Required:

What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 25 percent? (Round "ROI" to 1 decimal place. Negative amount should be indicated by a minus sign. Round your dollar values to nearest whole dollar.)