When the Bronx Company formed three divisions a year ago,the president told the division managers an annual bonus would be given to the most profitable division.The bonus would be based on either the return on investment or residual income of the division.Investment is to be measured using gross book value (GBV)or net book value (NBV).The following data are available:

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All the assets are long-lived assets that were purchased 15 years ago and have 15 years of useful life remaining.A zero terminal disposal price is predicted.Bronx's minimum rate of return (cost of capital)used for computing RI is 10%.
Required:Which method for computing profitability would each manager likely choose? Show supporting calculations.Round percentage answers to 2 decimal places.Where applicable,assume straight-line depreciation.
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 Feedback: 11ea6e70_bd6f_e280_8f54_ff2da3efc1b1_TB1699_00 Calculations: The manager's preferred measure is shown in bold. 11ea6e70_bd70_0891_8f54_37caead0c76e_TB1699_00 * Average net book value is one half of gross book value given that all assets were purchased 15 years ago and have 15 years of useful life remaining.

When the Bronx Company Formed Three Divisions a Year Ago,the