Assume that Google invests $2.42 billion in capital expenditures, including $1.08 billion related to manufacturing capacity. Assume that these projects have a seven-year life and that management requires a 15% internal rate of return on those projects. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate
Assume that Google invests $2.42 billion in capital expenditures, including $1.08 billion related to manufacturing capacity. Assume that these projects have a seven-year life and that management requires a 15%
Required
1. What is the amount of annual cash flows that Google must earn from those expenditures to achieve a 15% internal rate of return? (Hint: Identify the seven-period, 15% factor from the
2. Refer to the financial statements in Appendix A. Identify the amount that Google invested in capital assets for the year ended December 31, 2017.
3. Did Google or Apple invest more in capital assets for 2017?
What is the amount of annual cash flows that Google must earn from those expenditures to achieve a 15% internal rate of return? (Hint: Identify the seven-period, 15% factor from the present value of an annuity table and then divide $1.08 billion by the factor to get the annual cash flows required.) (Round your answer to the nearest whole dollar.)
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