The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $48.0 million andhaving a four-year expected life, after which the assets can be salvaged for $9.6 million. In addition, the division has $48.0 million inassets that are not depreciable. After four years, the division will have $48.0 million available from these nondepreciable assets. Thismeans that the division has invested $96.0 million in assets with a salvage value of $57.6 million. Annual depreciation is $9.6 million.Annual operating cash flows are $20.6 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.Required:a. & b. Compute ROI, using net book value and gross book value for each year. (Enter your answers as a percentage rounded to 1decimal place (i.e., 32.1).)Answer is complete but not entirely correct.ROIYear 11Year 2Net Book ValueGross Book Value12.8 %10.9%14.3 %10.9%Year 3416.3 %10.9%Year 419.1%10.9 %

Net Book Value -The term "net book value" (NBV) describes how an accountant records the assets or…

Answered: The Ste. Marie Division of Pacific…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $52 million and having a four-year expected life, after which the assets can be salvaged for $10.4 million. In addition, the division has $52 million in assets that are not depreciable. After four years, the division will have $52 million available from these nondepreciable assets. This means that the division has invested $104 million in assets with a salvage value of $62.4 million. Annual depreciation is $10.4 million. Annual operating cash flows are $25 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 (i.e., 32.1).)
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 $29 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 (i.e., 32.1).) ROI Net Book Value Gross Book…
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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. Required: a. & b. Compute ROI, using net book value and gross book value for each year. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Year 1 Year 2 Year 3 Year 4 ROI Net Book Value Gross Book Value % % %…
The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $35 million and having a four-year expected life, after which the assets can be salvaged for $7 million. In addition, the division has $35 million in assets that are not depreciable. After four years, the division will have $35 million available from these nondepreciable assets. This means that the division has invested $70 million in assets with a salvage value of $42 million. Annual depreciation is $7 million. Annual operating cash flows are $27.5 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. Assume that all cash flows increase 10 percent at the end of each year. This has the following effect on the assets’ replacement cost and annual cash flows. End of Year Replacement Cost Annual Cash Flow 1 $ 70,000,000 × 1.1 =…
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The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $38.5 million and having a four-year expected life, after which the assets can be salvaged for $7.7 million. In addition, the division has $38.5 million in assets that are not depreciable. After four years, the division will have $38.5 million available from these non depreciable assets. This means that the division has invested $77 million in assets with a salvage value of $46.2 million. Annual operating cash flows are $12.5 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). ROI Net Book Value Gross Book Value Year 1 % % Year 2 Year 3 % % % % Year 4 % %
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $38.5 million and having a four-year expected life, after which the assets can be salvaged for $7.7 million. In addition, the division has $38.5 million in assets that are not depreciable. After four years, the division will have $38.5 million available from these non depreciable assets. This means that the division has invested $77 million in assets with a salvage value of $46.2 million. Annual operating cash flows are $12.5 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 > Answer is complete but not entirely correct. Net Book Value 32.47 % 40.58 X…
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The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.0 million and having a four- year expected life, after which the assets can be salvaged for $7.4 million. In addition, the division has $37.0 million in assets that are not depreciable. After four years, the division will have $37.0 million available from these non depreciable assets. This means that the division has invested $74 million in assets with a salvage value of $44.4 million. Annual operating cash flows are $12.2 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.
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.5 million and having a four-year expected life, after which the assets can be salvaged for $7.5 million. In addition, the division has $37.5 million in assets that are not depreciable. After four years, the division will have $37.5 million available from these non depreciable assets. This means that the division has invested $75 million in assets with a salvage value of $45.0 million. Annual operating cash flows are $12.3 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. Required: a. & b. Compute ROI, using net book value and gross book value for each year. Note: Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.10). Answer is complete but not entirely ROI Net Book Value Gross Book Value Year 1 18.22 % 16.40%…

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