Missing economic income and b-1 as well as b-2

2 3 5 Use the cash flows and competitive spreads shown in the table below. (5 millions) Year 1 Year 2 Years 3-10 Year o 140 o Investment Production (millions of pounds per year) Spread ($ per pound) Net revenues Production costs Transport Other costs 0 0 0 0 0 0 .99 0 0 0 24 44 .99 43.56 34.00 0 24 84 .99 83.16 34.00 0 24 Cash flow -140 -24 -14.44 25.16 NPV (at r - 62) - O (- ) Assume the dividend payout ratio each year is 100%. a. Calculate the year-by-year book and economic profitability for investment in polyzone production. Assume straight-line depreciation over 10 years and a cost of capital of 6% (Negative answers should be indicated by a minus sign. Leave no cells blank - be certain to enter "o" wherever required. Do not round intermediate calculations. Enter your income answers in millions rounded to 2 decimal places and enter the rate of return as a percent rounded to 2 decimal places.) Period Book income (s in Book rate of return ( millions) (%) Economic income ($ in millions) 0 0 1 0 0 (38.00) (28.44) 11.16 0 (27.14) (22.57) 2 3 9.96 11.39 4 5 6 6 7 11.16 11.16 11.16 11.16 11.16 11.16 11.16 13.29 15.94 19.93 26.57 39 86 79.71 8 9 10 b-1. What is the economic rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b? ( b-1. What is the economic rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Economic rate of return 3.57 % b-2. Now compute the steady-state book rate of return (ROI) for a mature company producing polyzone. Assume no growth and competitive spreads. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) ROI 1% %