Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use the cash flows and competitive spreads shown in the table below. ($ millions ) Year 0 Year 1 Investment Year 2 Years 3-10 150

image text in transcribedimage text in transcribedimage text in transcribed

image text in transcribedimage text in transcribedimage text in transcribed
Use the cash flows and competitive spreads shown in the table below. ($ millions ) Year 0 Year 1 Investment Year 2 Years 3-10 150 Production (millions of pounds per year) 0 0 56 96 Spread ( $ per pound) 1. 11 1 . 11 1. 11 1. 11 Net revenues 0 62. 16 Production costs 106.56 46.00 46.00 Transport 0 0 Other costs 0 36 36 36 Cash flow -150 -36 -19. 84 24.56 NPV (at r = 93 ) = 0 Assume the dividend payout ratio each year is 100%.Economic Period Book income ($ in | Book rate of return millions) (%) income ($ in millions) 0 0 2 3 5 6 8 10b-'l. What is the economic rate of return? [Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Eoonomil: rain of return h-2. Now compute the steadystate book rate of return [ROI] for a mature company producing polyzone. Assume no grown-I 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.}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Institutions Management A Risk Management Approach

Authors: Anthony Saunders, Marcia Millon Cornett

9th edition

1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772

More Books

Students also viewed these Finance questions