Question: Stellar Computers has a well-earned reputation for earning a high return on capital. The firm had a return on capital of 100%, on capital invested
Stellar Computers has a well-earned reputation for earning a high return on capital. The firm had a return on capital of 100%, on capital invested of $1.5 billion, in 1999. Assume that you have estimated the value of the research asset to be $1 billion. In addition, the R&D expense this year is $250 million and that the amortization of the research asset is $150 million. Re-estimate Stellar Computer's return on capital.
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