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 13% return. (For example, if you bought a 737 for $19.85 million at the start of year 1 and sold it a year later, your total profit would be 18.07 + 4.36 - 19.85 = $2.58 million, 13% of the purchase cost.) Assume airlines write off their aircraft straight-line over 15 years to a salvage value equal to 10% of the original cost. Cash Flow Start of Year Market Value 1 19.85 2 18.07 3 16.95 4 15.86 5 15.05 6 14.17 7 13.52 8 12.76 9 12.21 10 11.54 11 11.07 12 10.47 13 10.07 14 9.52 15 9.17 16 8.67 4.36 3.47 3.29 2.87 2.84 2.49 2.52 2.21 2.26 1.97 2.04 1.76 1.86 1.59 1.69 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 "O" 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 Book depreciation Economic return (%) Book return (%) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 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 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 13% return. (For example, if you bought a 737 for $19.85 million at the start of year 1 and sold it a year later, your total profit would be 18.07 + 4.36 - 19.85 = $2.58 million, 13% of the purchase cost.) Assume airlines write off their aircraft straight-line over 15 years to a salvage value equal to 10% of the original cost. Cash Flow Start of Year Market Value 1 19.85 2 18.07 3 16.95 4 15.86 5 15.05 6 14.17 7 13.52 8 12.76 9 12.21 10 11.54 11 11.07 12 10.47 13 10.07 14 9.52 15 9.17 16 8.67 4.36 3.47 3.29 2.87 2.84 2.49 2.52 2.21 2.26 1.97 2.04 1.76 1.86 1.59 1.69 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 "O" 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 Book depreciation Economic return (%) Book return (%) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 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