Preview

Airbus: Operating Cash Flow and Market Risk Premium

Good Essays
Open Document
Open Document
909 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Airbus: Operating Cash Flow and Market Risk Premium
FIN 441
Assignment 1: Airbus Case Write a report on the Airbus A3XX.
In 750 to 1600 words, address the following questions: 1. Why is Airbus interested in building the A3XX—what are the favorable characteristics of the plane and what would be likely benefits to Airbus? 2. A. How many aircraft does Airbus need to sell each year in order to break even (in NPV) on this investment? The assigned assumptions for this calculation are described at the end of the assignment.
B. Where your break-even estimate in 2.A. relies on assumptions (including my suggestions below) that are unrealistic or uncertain, please comment on whether different assumptions would increase or decrease the break-even number. Along the same lines, you should comment on any relevant considerations that have been omitted in the calculation.
C. Compare the break-even number to likely annual demand for very large aircraft (VLA) up through 2019, considering both the projections supported by Airbus and those supported by Boeing in your determination of demand. Comment on the major factors determining demand, contrasting Boeing’s and Airbus’ views regarding the future of air travel.
3. How should Boeing respond to the possibility that Airbus might build the A3XX? Does your answer depend on what you expect Airbus to do? Even if you think there is no clearly best course of action for Boeing, you can describe the options and the ways in which they are desirable or undesirable.
4. Should Airbus commit to build the A3XX? Your answer to this question presumably will be based on the rest of your paper, especially the results from question 2. Feel free to comment on anything else that you think is important or interesting. General Instructions:
Prepare your answers in the form of a unified report rather than, for example, a set of bullet points. You may (but are not required to) include section headings, but the sections ideally will transition smoothly from one to the

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Nt1310 Unit 4 Case Study

    • 317 Words
    • 2 Pages

    I have attached question number 11 for everyone to review. This step is not completely done because we are missing expenses and revenues for 2017. The reason I am sending it out to you guys is so that you can see what I have done so far. This information may be particularly relevant to Jon. In the excel document, there are two tabs so far: the original budget, and expense scenario 1. The first tab is all the calculations I have done to get to tab 2. Also, In tab 1 I have made the following assumptions.…

    • 317 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    BUS 640 Week 4 Problems

    • 718 Words
    • 3 Pages

    (ii) What profit do you expect that the firm will make in the first year?…

    • 718 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Volkswagen is considering opening an Assembly Plant in Chattanooga, Tennessee, for the production of its 2012 Passat, tailored for the US market. The CEO of the company is considering two potential options for the size of the plant: one is a large size with a projected annual production of 150,000 cars, and the other one is a smaller size plant, which is cheaper to build, but can only produce up to 80,000 cars per year. Depending on the expected level of demand for these cars in the US, Volkswagen has to decide which option is more profitable. The discount rate is 6% and for simplicity purposes, the CEO is only evaluating a two-year horizon. The initial factory setup cost, the expected demand scenarios, profit, and probabilities are shows in the below table. Calculate the Net Present Value in each of the two options. Which option should the CEO choose and why? Please, show all your calculations.…

    • 702 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    3. Should you continue to look at the papers? Explain. No, I should not continue looking at the papers.…

    • 948 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Week 5 Assessment

    • 1649 Words
    • 6 Pages

    2. Read each question. Note the Question # and a brief heading above your written response to each question. Use subheadings to help organize your thoughts and comments. Use enough narrative for the sake of clarity. Use bullet points for elements that lend themselves well to lists.…

    • 1649 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Finance Case

    • 483 Words
    • 3 Pages

    The Venture Capital Division of Boeing has four projects on the table with three additional leverages of debt. As the financial analyst for the division I was given the task of evaluating the four capital budgeting projects. After evaluating each project I will recommend which project will bring the most value to shareholders and the firm.…

    • 483 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Assignment 1 2015W

    • 491 Words
    • 3 Pages

    1. For the case you choose to analyze, answer each question one by one in paragraphs. The answers to the three questions should be logically connected.…

    • 491 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    ONLINE ASSIGNMENT 2 5

    • 718 Words
    • 4 Pages

    This case is aimed for you to explore the tradeoffs shown in my notes "Product Design" on the last page. Each arrow represents a tradeoff between each pair of factors influencing performance of the new product introduction projects. For example, if a company tries to develop a higher quality product (high product performance), it might take longer to develop, thus development time will be sacrificed and visa verse: if development time is shortened, most likely quality must be sacrificed (top horizontal double arrow). The case below asks you to evaluate several alternatives revolving around different circumstances (quality varies, time changes, development time changes). Question d) is where you are expected to put everything you have done in a), b), and c) together.…

    • 718 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Airbus Case Analysis

    • 1553 Words
    • 7 Pages

    1. Reasons that Airbus interested in A3XX  A Revolution Adventure -- The first objective of this project is to fill the market gap by introducing a new type of aircraft. Airbus, with A3XX under the plan, is stepping into an area that Boeing has rarely touched, the very large aircraft (VLA) market. If Airbus well forecasts the future market, A3XX will be the flagship in a new airline revolution. Capturing more than half the VLA market with A3XX, Airbus would constitute an enormous financial success and achieve the ultimate objective-- the leader of commercial aviation industry.  Abundant Financial Resources and Developed Technologies -- Airbus possesses abundant funding resources and cutting-edge technologies which could substantially reduce the training cost. Airbus was prepared to receive around $4 billion development loans from the British, French, German and Spanish governments, repayable from sales revenue. Together with contributions from risk-sharing partners and its own shareholders, Airbus has no need to worry about its financial resources and thus can concentrate on the production and sale of A3XX. In addition, the well-developed aircraft technologies such as fly-by-wire technology, fight deck design, and performance characteristics that are common across the Airbus family pave the way for the A3XX’s development and potential market.  Favorable factors from Context Analysis -- Needs for travelling and cargo transportation are essential parameters which airlines have to take into consideration; hence, they are also vital determinants of demand for commercial aircrafts. According to Airbus’s Global Market Forecast (GMF), air transportation industry is expected to grow at 4.9% annually. This continuous growth demand of the flight market can offer Airbus Company a sound support to launch new types of planes. In…

    • 1553 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    hi ny nab

    • 1613 Words
    • 7 Pages

    Start each answer with a sentence or two that express your main idea(s). Think in terms of patterns or themes.…

    • 1613 Words
    • 7 Pages
    Good Essays
  • Good Essays

    b. Using the base-case model set up in part a, perform a what-if analysis based on the questions presented…

    • 2010 Words
    • 9 Pages
    Good Essays
  • Good Essays

    You MUST prepare the responses (typed) beforehand and bring them to the exam. If you single-space your responses, you should be able to fit both responses on a single page (preferred). Do NOT use title pages or other unnecessary covers. No elaborate headings – just your name and your responses will do.…

    • 649 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    A320 Landing Gear System

    • 6117 Words
    • 25 Pages

    The Airbus A320 family consists of short- to medium-range, narrow-body, commercial passenger jet airliners manufactured by Airbus. The family includes the A318, A319, A320 and…

    • 6117 Words
    • 25 Pages
    Powerful Essays
  • Good Essays

    In order to evaluate the aircraft proposal we need to calculate the NPV and IRR of both the Aircraft purchasing and leasing option. Investment decisions determine the future cash flows of a company and expected future cash flows determine the value of a company.…

    • 629 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Hello There

    • 1316 Words
    • 5 Pages

    Each question should be numbered and stated before you write your answer. Hint: The easiest way to handle this is to copy and paste all questions onto a new word document and then simply write your answers under each question.…

    • 1316 Words
    • 5 Pages
    Good Essays