Problem 12-24 Accounting measures of performance The table given below shows how, on average, the market value of a Boeing 737 has varied with its age and the cash flow needed in each year to provide a 10% return. (For example, if you bought a 737 for $20.03 million at the start of year 1 and sold it a year later, your total profit would be 18.16 + 3.87 - 20.03 = $2.00 million, 10% of the purchase cost.) Assume airlines write off their aircraft straight-line over 15 years to a salvage value equal to 20% of the original cost. Start of Year Market Value Cash Flow 1 20.03 2 18.16 3.87 17.13 2.85 15.95 2.89 15.23 2.32 14.26 2.49 7 13.70 1.99 8 12.85 2.22 9 12.39 1.75 19 11.63 2.00 11 11.25 1.54 12 10.56 1.82 13 10.25 1.37 14 9.61 1.67 15 9.35 1.22 16 8.76 1.53 a. Calculate economic depreciation, book depreciation, economic return, and book return for each year of the plane's life. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your answers in millions except for percentage values. Round your percentage answers to 1 decimal place and other answers to 2 decimal places.) Start of Year Economic depreciation 0 Book depreciation 0 Economic return (%) 0 Book return (%) 0 1 1 1.87 1.00 10.0 2 3 1.03 1.00 10.0 4 1.00 10.0 10.0 5 1.00 1.18 0.72 0.97 0.56 1.00 10.0 6 7 10.0 8 0.85 10.0 10.01 9 1.00 1.00 1.00 1.00 1.00 0.46 0.76 0.38 10 10.0 PI 11 12 0.69 10.0 10.0 10.0 10.0 13 0.31 0.64 1.00 1.00 1.00 1.00 1.00 14 15 0.26 10.0 16 0.59 10.0 b-1. Suppose an airline invested in a fixed number of Boeing 737s each year. Calculate the steady-state book rate of return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Steady-state book rate of return % b-2. Would steady-state book return overstate or understate true return? Understate Overstate