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.

7- Calculate net present value (NPV) for the above investment decision.Would you accept or reject this investment decision? Why?

8- Calculate payback period. If you know that google accepts projects with 4 years payback period. Would you accept that project?

9- Calculate the Motorola project internal rate of return (IRR). Would you accept or reject this project? Why?

10- Calculate theaverage accounting return (AAR). If you know that the required average accounting return is 25%. Would you accept that project?

11- Calculate profitability index of the above project. Would you accept or reject that deal? Why?