Please Correct!

Problem 12-24 Accounting measures of performance The table given below shows how, on average, the market value of a Boeing 737 has varied with its age and the cash flow needed in each year to provide a 13% return. (For example, if you bought a 737 for $20.09 million at the start of year 1 and sold it a year later, your total profit would be 18.19 + 4.51 20.09 = $2.61 million, 13% of the purchase cost.) Assume airlines write off their aircraft straight-line over 15 years to a salvage value equal to 10% of the original cost. Cash Flow Start of Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Market Value 20.09 18.19 17.19 15.98 15.29 14.29 13.76 12.88 12.45 11.66 11.31 10.59 10.31 9.64 9.41 8.79 4.51 3.36 3.44 2.77 2.99 2.39 2.67 2.10 2.41 1.87 2.19 1.66 2.01 1.48 1.84 X Answer is complete but not entirely correct. Start of Year Economic depreciation Book depreciation Economic return (%) Book return (%) 1 0 0 0 0 2 1.90 1.21 13.0 16.4 3 1.00 1.21 13.0 11.4 4 1.21 1.21 13.0 12.6 5 0.69 1.21 13.0 9.5 6 1.00 1.21 13.0 11.7 7 0.53 1.21 13.0 8.4 8 0.85 X 1.21 13.0 11.4 9 0.43 1.21 13.0 7.7 10 0.79 1.21 13.0 11.5 11 0.35 1.21 13.0 7.2 12 0.72 1.21 13.0 12.3 13 0.25 1.21 13.0 6.6 x 14 0.67 1.21 13.0 14.4 x 15 0.23 1.21 13.0 6.2 16 0.62 1.21 13.0 20.0 X b-1. Suppose an airline invested in a fixed number of Boeing 737s each year. Calculate the steady-state book rate of return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) X Answer is complete but not entirely correct. Steady-state book rate of return 11.20 %