Question: Please answer questions 7-9 if possible. Please show formulas with solution (Excel) . Thank you! Motorola Mobility LLC is a company that develops mobile devices.
Please answer questions 7-9 if possible. Please show formulas with solution (Excel) . Thank you!
Motorola Mobility LLC is a company that develops mobile devices. Headquartered in Chicago, Illinois, United States, the company was formed on January 4, 2011 by the split of Motorola Inc. into two separate companies; Motorola Mobility took on the company's consumer-oriented product lines, including its mobile phone business and its cable modems and set-top boxes for digital cable and satellite television services, while Motorola Solutions retained the company's enterprise-oriented product lines. Early 2012, Google decided to purchase Motorola 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 | Cash flow(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 Googles required rate of return is its WACC.
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7- Calculate net present value (NPV) for the above investment decision. Would you accept or reject this investment decision? Why? (NOTE: RATE is 12.05%)
8- Calculate payback period. If you know that google accepts projects with 4 years payback period. Would you accept that project?
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9- Calculate the Motorola project internal rate of return (IRR). Would you accept or reject this project? Why?
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