Question
just need some help solving this problem, thanks 1- Calculate net present value (NPV) for the above investment decision. Would you accept orreject this investment
just need some help solving this problem, thanks
1- Calculate net present value (NPV) for the above investment decision. Would you accept orreject this investment decision? Why?2- Calculate payback period. If you know that google accepts projects with 4 years paybackperiod. Would you accept that project?3- Calculate the Motorola project internal rate of return (IRR). Would you accept or reject thisproject? Why?4- Calculate the average accounting return (AAR). If you know that the required averageaccounting return is 25%. Would you accept that project?5- Calculate profitability index of the above project. Would you accept or reject that deal? Why?
Motorola Mobility LLC is a company that develops mobile devices. Headquartered in Chicago, Illinois, United States, the company was formed on January 4, 2011 by the split of Motorola Inc. into two separate companies; Motorola Mobility took on the company's consumer-oriented product lines, including its mobile phone business and its cable modems and set-top boxes for digital cable and satellite television services, while Motorola Solutions retained the company's enterprise-oriented product lines. Early 2012, Google decided to purchase Motorola mobility LLC for $12.5b. Google had a plan to keep Motorola mobility for 5 years. Google financial analysis team made the following forecasts: year 2012 2013 2014 2015 2016 Cash flow(in billions) 1.5 2.5 4 3 6 (includes 3.5b selling price) Net income(in billions) 1 2 3 2 1.5 And that the average book value of asset is $8b and Google's required rate of return is 11%. 1- Calculate net present value (NPV) for the above investment decision. Would you accept or reject this investment decision? Why? 2- Calculate payback period. If you know that google accepts projects with 4 years payback period. Would you accept that project? 3- Calculate the Motorola project internal rate of return (IRR). Would you accept or reject this project? Why? 4- Calculate the average accounting return (AAR). If you know that the required average accounting return is 25%. Would you accept that project? 5- Calculate profitability index of the above project. Would you accept or reject that deal? WhyStep by Step Solution
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