The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing...

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The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $54 million and having a four-year expected life, after which the assets can be salvaged for $10.8 million. In addition, the division has $54 million in assets that are not depreciable. After four years, the division will have $54 million available from these nondepreciable assets. This means that the division has invested $108 million in assets with a salvage value of $64.8 million. Annual depreciation is $10.8 million. Annual operating cash flows are $27 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. Required: a. & b. Compute ROI, using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (l.e., 32.1).) Answer is complete but not entirely correct. ROI Net Book Value Gross Book Value Year 1 25.0 % 25.0 % Year 2 27.8 % 25.0 % Year 3 31.3 x % 27.8 x % Year 4 35.7 x % 31.3 % The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $54 million and having a four-year expected life, after which the assets can be salvaged for $10.8 million. In addition, the division has $54 million in assets that are not depreciable. After four years, the division will have $54 million available from these nondepreciable assets. This means that the division has invested $108 million in assets with a salvage value of $64.8 million. Annual depreciation is $10.8 million. Annual operating cash flows are $27 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. Required: a. & b. Compute ROI, using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (l.e., 32.1).) Answer is complete but not entirely correct. ROI Net Book Value Gross Book Value Year 1 25.0 % 25.0 % Year 2 27.8 % 25.0 % Year 3 31.3 x % 27.8 x % Year 4 35.7 x % 31.3 %

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Answer Lets calculate the Return on Investment ROI using both net book value and gross book value a ... View the full answer