sse Logistics Just started operations. It purchased depreciable assets costing $39.5 million and havir which the assets can be salvaged for $7.9 million. In addition, the division has $39.5 million in asset ur years, the division will have $39.5 million available from these non depreciable assets. This mean 9 million in assets with a salvage value of $47.4 million. Annual operating cash flows are $12.7 million uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line es noted laore taxes

sse Logistics Just started operations. It purchased depreciable assets costing $39.5 million and havir which the assets can be salvaged for $7.9 million. In addition, the division has $39.5 million in asset ur years, the division will have $39.5 million available from these non depreciable assets. This mean 9 million in assets with a salvage value of $47.4 million. Annual operating cash flows are $12.7 million uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line es noted laore taxes

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $45.5 million and having a four-year expected life, after which the assets can be salvaged for $9.1 million. In addition, the division has $45.5 million in assets that are not depreciable. After four years, the division will have $45.5 milion available from these non depreciable assets. This means that the division has invested $91 million in assets with a salvage value of $54.6 million. Annual operating cash flows are $13.9 million. In computing ROI, this division uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value. Note: Enter your answers as a percentage rounded to 2 decimal place (i.e.. 32.10). Year 1 Year 2 Year 3 Year 4 ROI Net Book Value Gross Book Value % % % % % % % %
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