Calculate the year-by-year book and economic profitability for investment in polyzone production, as described in Chapter 11.
Question:
Calculate the year-by-year book and economic profitability for investment in polyzone production, as described in Chapter 11. Use the cash flows and competitive spreads shown in Table 11.2, and assume straight-line depreciation over 10 years.
What is the steady-state book rate of return (ROI) for a mature company producing polyzone? Assume no growth and competitive spreads.
Table 11.2
Transcribed Image Text:
Year 0 100 Year 1 Year 2 Years 3-10 Investment Producton, illions of pounds per year Spread, S per pound 40 80 95 .95 95 .95 76 30 Net revenues 38 30 Production costs Transport Other costs Cash flow 20 20 -100 -12 +26 NPV (at r= 8%)-0
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Related Book For
Principles of Corporate Finance
ISBN: 978-0078034763
11th edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen
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