(Solved): The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets ...

The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing \( \$ 36 \) million and having a four-year expected life, after which the assets can be salvaged for \( \$ 7.2 \) million. In addition, the division has \( \$ 36 \) million in assets that are not depreciable. After four years, the division will have \( \$ 36 \) million available from these nondepreciable assets. This means that the division has invested \( \$ 72 \) million in assets with a salvage value of \( \$ 43.2 \) million. Annual operating cash flows are \( \$ 12 \) 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 the company uses an 8 percent cost of capital. Required: a. Compute residual income, using net book value for each year. b. Compute residual income, using gross book value for each year. Note: For all the requirements, enter your answers in thousands of dollars. Negative amounts should be indicated by a minus sign.