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Business, 05.05.2020 06:33 20068513

The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $48 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 million in assets that are not depreciable. After four years, the division will have $48 million available from these nondepreciable assets. This means that the division has invested $96 million in assets with a salvage value of $57.6 million. Annual depreciation is $9.6 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.

Compute ROI using historical cost, net book value and gross book value.

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