Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
Bartleby Related Questions Icon

Related questions

Question
The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $48.0 million and
having a four-year expected life, after which the assets can be salvaged for $9.6 million. In addition, the division has $48.0 million in
assets that are not depreciable. After four years, the division will have $48.0 million available from these nondepreciable assets. This
means 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 1
decimal place (i.e., 32.1).)
Answer is complete but not entirely correct.
ROI
Year 11
Year 2
Net Book Value
Gross Book Value
12.8 %
10.9
%
14.3 %
10.9
%
Year 3
4
16.3 %
10.9%
Year 4
19.1%
10.9 %
expand button
Transcribed Image Text:The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $48.0 million and having a four-year expected life, after which the assets can be salvaged for $9.6 million. In addition, the division has $48.0 million in assets that are not depreciable. After four years, the division will have $48.0 million available from these nondepreciable assets. This means 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 1 decimal place (i.e., 32.1).) Answer is complete but not entirely correct. ROI Year 11 Year 2 Net Book Value Gross Book Value 12.8 % 10.9 % 14.3 % 10.9 % Year 3 4 16.3 % 10.9% Year 4 19.1% 10.9 %
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Similar questions
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education