The Boeing 7e7

As Pleasure Craft Inc. has publicly held debt; we determined the cost of debt to be the yield to maturity on the outstanding debt on the outboard motor project, so using a financial calculator we establish the YTM to be equal to 2.4827%. Because this is a Semi- annual compounding, rd = YTM * 2 = 4.9654%; for the cost of equity (Rf + β (Rm - Rf)): 12.8420%. The WACC is the discount rate of the projects WACC = rd * (1- Td) * D/V + (re * E/ V) = 4.9654% (1- 35%) * 30% + 12.8420% * 70% = 0.0996, so the WACC is determined to be 9.96% for outboard motors project. The NPV of this project is positive and equal to $35,630,973.63, the IRR for the outboard motors has calculated to be 8%. From these calculation we can know the project’s beta is lower than project front- end loader project and the risk is lower also; from the decision rule the NPV > 0 and IRR > R, so we choose the outboard motor project.

This paper consists of several sections. The description of the project outlines the capital asset decision at hand, which in this case is the purchase of a new Boeing 787-9 Dreamliner by American Airlines. The second section of the paper highlights some of the information about the Dreamliner. Statistics about seat configuration are critical to the revenue projects used later in the net present value (NPV) calculation. The third section of the paper covers the lease or buy decision. American has both options and this section covers some of the financial aspects of each that are critical, such as depreciation. The fourth section is an explanation of the weighted-average cost of capital for American Airlines. The fifth section is an outline of the NPV calculation. The final section is the conclusion. The NPV compares directly the incremental cash flows associated with the lease option and those associated with the buy option. The final NPV figures are close to one another, but one option clearly adds more value to the company to the other. The "buy" option is therefore recommended.

To find the cost of equity we used the formula rs = rRF + beta*MRP in which rRF2002 = 5.86% and the Market Risk Premium (MRP) = 5% as calculated by the Southwest Airlines finance department. We then calculated the beta for Southwest Airlines based on a regression analysis of five-year monthly returns on Southwest stock from January 1997 to January 2002, compared with the S&P 500 returns over the same period. This regression analysis indicated that Beta = .2219. Therefore,

What is an appropriate required rate of return against which to evaluate the prospective IRRs from the Boeing

The Boeing 737 is the best-selling jet airliner in the history of aviation. The following report will look in depth at the company Boeing itself and its roots, the planning and production of the 737 series of aircraft, the progression of the aircraft and its upgrades, the aviation human factors and airport planning factors considered during production, the next generation upgrades the aircraft has seen, and an overall evaluation of the aircraft systems involved when referring to the Boeing 737 aircraft. The airframe, power plant, hydraulic, pneumatic, anti-icing systems, communications, flight controls, winglets, flight instruments, seating possibilities, specifications, load capacity, efficiency, reliability, range, production and sales, and the future of the 737 will all be discussed and analyzed to show why and how the Boeing 737 became the world’s most popular jet airliner to date.

In 2004, Boeing was one of the United States' largest manufacturers, with nearly 160,000 employees and a net income of$I.87 billion. It was the world's largest acrospace company, and, for decades, had dominated the world's commercial Copyright © 2006 President and Fellows of Harvard College. Harvard Business School Case 807-011. Professors Lynda M. Applegate and Joseph S. Valacich (Washington State University) and Research Associates Mara E. Vatz and Christoph Schneider prepared this case as the basis for class discussion rather than to illustrate effective or ineffective management.

In the 21st century, any company whose ultimate goal is to achieve leadership within its industry, it is necessary that they think beyond their domestic market and consider global markets instead. By doing this, they need to be able to change or implement their strategy in order to stay as competitive as they were before, form alliances and partners along the way and outperform the competition. For Boeing, trying to become the global leader in its industry again meant that they needed to launch an exceptional, better aircraft than their competition, Airbus. They were also relying on foreign partners more than ever before to get every part ready in time for assembly. With the launch of their 25th model named the 787 Dreamliner, scheduled

Is there anything else the board of directors should consider in assessing the financial appeal of this project? Why might the board vote 'yes' on the 7E7, when the cost of capital estimate is greater than the IRR? Why might the board vote 'no' if the cost of capital is less than the IRR?

Boeing boosts an extensive product and service listing which includes both commercial and military aircraft, satellites, weapons, electronic systems, defense systems, advanced information and communication systems and performance based logistics and training. Boeing is able to continue to be a leader within their industry as they work to persistently develop their product lines and offer more services to meet their customers growing needs. Boeing consists of two business units, the Commercial Airplane Unit and the

Another deciding factor propelling Boeing into the commercial airline sector was their burgeoning need to compete with the Airbus. “When the Airbus was prospering, the Boeing Company was struggling with rising costs, declining productivity, delays in deliveries, and production inefficiencies. Boeing Commercial Aircraft Group lost $1.8 billion in 1997 and barely generated any profits in 1998.18 All through the 1990s; the Boeing Company looked for ways to revitalize its outdated production manufacturing system on the one hand, and to introduce leading edge technologies into its jetliners on the other. The development and production of the 777, first conceived of in 1989, was an early step undertaken by Boeing managers to address both problems.” (Kerzner, p.93)

This beta is calculated using 40 years of data from Jan 2nd, 1962 to Dec 30th, 2002 (Because the data for historical price of Boeing before 1962 is not available)

On April 26, 2004, as Airbus surpassed its market share for the first time in the history, Boeing announced its plans to develop the Dreamliner 787 (initially known as Boeing 7E7). These plans were meant to recapture its leading position in the commercial aircraft market. With this aircraft, Boeing used a different approach for development. This report introduces the market position of the 787, addresses its new development strategy and its possible outcomes, and provides recommendations to the project regarding challenges and the competitors Boeing faces.

Boeing forecasted that this region’s economy will grow 4.5% per year for next 20 years, which is major contributor for the whole world’s GDP growth and this is led by China and India. It is predicted that in next 20 years, the passenger air travel growth (RPK) will be increased by 6.3% per year and the cargo (RTK) by 5.8% per year. It is also forecasted that the number of airplanes will be increased to 14750 from 5090 in 2012, which is the huge increase among other world regions (Boeing, 2013) Figure .

The company continues to develop its product line and services to meet the ever-changing needs in a fast-paced global environment. Boeing seeks to create new, industry leading jets for its commercial airplane family while designing, building and integrating military platforms and defense systems and positioning state-of-the-art financing and service options for its customers.

Airbus’ competitor Boeing netted 40 new sales of their 747 model, worth $6.5 billion (USD) in 1994.3 This had portrayed Airbus’ inability to compete at this high value end of the market. With the mounting sense of urgency, Airbus need to intensify the design and development of a UHCA to fill the top end of its product line and stop the dominance of Boeing in large aircraft market with 747 for over two decades. Hence, in June 1994, Airbus announced its project goal to build a high-capacity, high-efficiency aircraft with up to 569 seat capacity and a maximum range of 8,520 nautical miles; the project was designated A3XX.4 Many airlines faced a dilemma whether to opt for earlier option of the new Boeing 747X, or the all new A3XX. During a meeting with 13 major airliners in Carcassonne, Airbus had then assured them with a scope to work toward preliminary and final design freezes scheduled on the end of 1997 and