The Ste. Marie Division of Pacific Media Corporationjust started operations. It purchased depreciable assets costing...
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Accounting
The Ste. Marie Division of Pacific Media Corporationjust 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 $30 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division usesbeginning-of-yearasset 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 (i.e., 32.1).)
ROI
Net Book Value % Gross Book Value %
Yr 1
Yr 2
Yr 3
Yr 4
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