Assume Apple invested $2.12 billion to expand its manufacturing capacity. Assume that these assets have a 10-year life and that Apple requires a 10% internal rate of return on these assets. Required 1. What is the amount of annual cash flows that Apple must earn from these projects to have a 10% internal rate of return? Hint: Identify the 10-period, 10% factor from the present value of an annuity table, and then divide $2.12 billion by this factor to get the annual cash flows necessary 2. Access Apple’s financial statements for the fiscal year ended September 30, 2017, from Appendix A. a. Determine the amount that Apple invested in capital assets for 2017. Hint: Refer to the statement of cash flows. b. Did Apple invest more in capital assets or in marketable securities for 2017?
Assume Apple invested $2.12 billion to expand its manufacturing capacity. Assume that these
assets have a 10-year life and that Apple requires a 10%
Required
1. What is the amount of annual
rate of return? Hint: Identify the 10-period, 10% factor from the present value of an annuity table,
and then divide $2.12 billion by this factor to get the annual cash flows necessary 2. Access Apple’s financial statements for the fiscal year ended September 30, 2017, from Appendix A.
a. Determine the amount that Apple invested in capital assets for 2017. Hint: Refer to the statement
of cash flows.
b. Did Apple invest more in capital assets or in marketable securities for 2017?
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