Motorola Mobility LLC is a company that develops mobile devices. Headquartered in Chicago, Illinois, United States, the company was formed on January 4, 2011 by the split of Motorola Inc. into two separate companies; Motorola Mobility took on the company’s consumer-oriented product lines, including its mobile phone business and its cable modems and set-top boxes for digital cable and satellite television services, while Motorola Solutions retained the company’s enterprise-oriented product lines. Early 2012, Google decided to purchase Motorola mobility LLC for $12.5b. Google had a plan to keep Motorola mobility for 5 years. Google financial analysis team made the following forecasts:
|
Year |
Cash flow(in billions) |
Net income (in billions) |
|
2012 |
1.5 |
1 |
|
2013 |
2.5 |
2 |
|
2014 |
4 |
3 |
|
2015 |
3 |
2 |
|
2016 |
6 (includes 3.5b selling price) |
1.5 |
And that the average book value of asset is $8b and Google’s required rate of return is its WACC.
7- Calculate payback period USING EXCEL. If you know that google accepts projects with 4 years payback period. Would you accept that project?
