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 11% return. (For example, if you bought a 737 for $19.97 million at the start of year 1 and sold it a year later, your total profit would be 18.13 + 4.04 19.97 = $2.20 million, 11% of the purchase cost.) Assume airlines write off their aircraft straight-line over 15 years to a salvage value equal to 25% of the original cost.

Start of Year	Market Value	Cash Flow
1	19.97
2	18.13	4.04
3	17.07	3.05
4	15.92	3.03
5	15.17	2.50
6	14.23	2.61
7	13.64	2.16
8	12.82	2.32
9	12.33	1.90
10	11.60	2.09
11	11.19	1.69
12	10.53	1.89
13	10.19	1.50
14	9.58	1.73
15	9.29	1.34
16	8.73	1.58

A.) a. Calculate economic depreciation, book depreciation, economic return, and book return for each year of the planes 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.) JUST NEED HELP WITH THE BOOK RETURN (%) COLUMN

START OF YEAR	ECONOMIC DEPRECIATION	BOOK DEPRECIATION	ECONOMIC RETURN (%)	BOOK RETURN (%)
1	0	0	0	0
2	1.84	1.00	11.0
3	1.06	1.00	11.0
4	1.15	1.00	11.0
5	0.75	1.00	11.0
6	0.94	REST OF THIS COLUMN IS 1.00	REST OF THIS COLUMN IS 11.0
7	0.59
8	0.82
9	0.49
10	0.73
11	0.41
12	0.66
13	0.34
14	0.61
15	0.29
16	0.56

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?

multiple choice

• Understate

• Overstate

2.)

The table below shows a condensed income statement and balance sheet for Androscoggin Coppers Rumford smelting plant (figures in $ millions). Assume the cost of capital is 11%.

JUST NEED HELP WITH PART B

Income Statement for 2018				Assets, December 31, 2018
Revenue	$	57.66		Net working capital	$	6.98
Raw materials cost		18.62
Operating cost		20.99		Investment in plant and equipment		70.33
Depreciation		4.40		Less accumulated depreciation		21.11
Pretax income	$	13.65		Net plant and equipment	$	49.22
Tax at 21%		2.87
Net income	$	10.78		Total assets	$	56.20

a. Calculate the plants EVA. (Enter your answer in millions rounded to 2 decimal places.)

EVA=$4.60 MILLION

b. As the table above shows, the plant is carried on Androscoggins books at $49.22 million. However, it is a modern design, and could be sold to another copper company for $94 million. How should this fact change your calculation of EVA? (Negative answers should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places.)

EVA=_____MILLION