Gandolfi Construction Co. purchased a used CAT 336DL earth mover at a cos: of $500,000 in January 2016.
The company's estimated useful life of this heavy equipment is 10 years, and the estimated salvage value is $100,000.
Assume that Gandolfi Construction Co. calculated depreciation expense for the CAT 336DL earth mover on the straight-line method and reported $600,000 of net income for the year ended December 31, 2016.
The company's average total assets for 2015 were $4, 030,000 Required:
a. Calculate Gandolfi's ROI for the year ended December 31 2016.
b. Calculate what Gandolfi's ROI would have been for the year ended December 31, 2016 had the company used the double declining balance depreciation method for the CAT 336DL earth mover.