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    ROI and Residual Incomes

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    ROI and Residual Incomes

    BOATS
    A B C D E
    Revenues 5,500,000 8,300,000 10,400,000 12,800,000 20,400,000
    Annual Expenses 3,800,000 8,200,000 9,100,000 9,900,000 18,900,000
    Income 1,700,000 100,000 1,300,000 2,900,000 1,500,000

    Book Value 0 5,200,000 6,100,000 5,200,000 8,300,000
    Market Value 5,000,000 6,200,000 8,000,000 10,000,000 15,000,000

    a. The cost of capital for the company's 10%.
    b. What is the ROI of each boat using the market value of the investment in it?
    c. What is the residual income of each boat using its book value?
    d. What is the residual income of each boat using its market value?
    e. Which trawler had the best year?

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    Solution Preview

    ROI residual incomes
    ________________________________________
    NP 7.9 ROI and Residual Incomes

    BOATS

    A B C D E

    Revenues 5,500,000 8,300,000 10,400,000 12,800,000 20,400,000

    Annual Expenses 3,800,000 8,200,000 9,100,000 9,900,000 18,900,000

    Income 1,700,000 100,000 1,300,000 2,900,000 1,500,000

    Book Value 0 5,200,000 6,100,000 5,200,000 8,300,000

    Market Value 5,000,000 6,200,000 8,000,000 10,000,000 15,000,000 ...

    Solution Summary

    This solution is comprised of a detailed explanation to find ROI and Residual Incomes of each boat.

    $2.19

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