Question
Motorola Mobility LLC is a companythat develops mobile devices . Headquartered in Chicago , Illinois , United States, the company was formed on January 4,
Motorola Mobility LLCis a companythat developsmobile devices. Headquartered inChicago,Illinois, United States, the company was formed on January 4, 2011 by the split ofMotorola Inc.into two separate companies; Motorola Mobility took on the company's consumer-oriented product lines, including itsmobile phonebusiness and itscable modemsandset-top boxesfordigital cableandsatellite televisionservices, whileMotorola Solutionsretained the company's enterprise-oriented product lines.Early 2012, Google decided to purchaseMotorola 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
Cashflow(in billions)
Net income (in billions)
2012
1.5
1
2013
2.5
2
2014
4
3
2015
3
2
2016
6 (includes 3.5b selling price)
1.5
And that the average book value of asset is $8b and Google's required rate of return isits WACC.Calculate theaverage accounting return (AAR). If you know that the required average accounting return is 25%. Would you accept that project?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started