Problem 12-16 Accounting measures of performance Use the cash flows and competitive spreads shown in the table below. Year 0 140 ($ millions) Year 1 Year 2 Years 310 0 .99 Investment Production (millions of pounds per year) Spread ($ per pound) Net revenues Production costs Transport Other costs . 43.56 34.00 84 .99 83.16 34.00 0 24 24 Cash flow -140 -24 -14.44 25.16 NPV (at r = 6) = 0 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 "0" 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.) 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 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 % Problem 12-16 Accounting measures of performance Use the cash flows and competitive spreads shown in the table below. Year 0 140 ($ millions) Year 1 Year 2 Years 310 0 .99 Investment Production (millions of pounds per year) Spread ($ per pound) Net revenues Production costs Transport Other costs . 43.56 34.00 84 .99 83.16 34.00 0 24 24 Cash flow -140 -24 -14.44 25.16 NPV (at r = 6) = 0 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 "0" 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.) 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 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 %