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...

Extracted text: 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 b-2. Would steady-state book return overstate or understate true return? O Understate O Overstate


Extracted text: 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 12% return. (For example, if you bought a 737 for $19.83 million at the start of year 1 and sold it a year later, your total profit would be 18.06 + 4.15 – 19.83 = $2.38 million, 12% of the purchase cost.) Assume airlines write off their aircraft straight-line over 15 years to a salvage value equal to 15% of the original cost. Market Value 19.83 18.06 16.93 Start of Year Cash Flow 2 4.15 3 3.30 4 15.85 3.11 5 15.03 2.72 2.67 2.36 6 14.16 7 13.50 12.75 2.37 9 12.19 2.09 10 11.53 2.12 11 11.05 1.86 12 10.46 1.92 13 10.05 1.67 14 9.51 1.75 15 9.15 1.50 16 8.66 1.59 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.) Economic Вook Economic Book return Start of Year depreciation depreciation return (%) (%) 1 2 3 5 6 7 8 9