Kristopher Kirkpatrick February 3rd‚ 2015 Finance Policy The Boeing 7E7 I. Statement Of The Problem Michael Bair‚ Boeing Senior Vice President announced a new “super-efficient” jet‚ the Boeing 7E7‚ also known as the “Dreamliner.” The only problem with this announcement was that it was announced in 2003‚ a time period where airline profits were the worse seen in a generation. In order for this plane to get the approval of the board‚ Bair would need to complete a valuation of the 7E7 project and
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case or not. The problem # 2 is whether the case can make profit or not. The problem # 3 whether the project can be pulled off within a certain price range – Boeing board wants de (page 259 Paragraph 1 Start at final 258 last case) The problem # 4: what is the exactly demand of the new project Boeing 7E7. The problem # 5: why Boeing Company abandon the previous project‚ which they tried to develop the higher- tech. (sonic Cruiser‚ page 258) Assumption 1: base on the problem # 1‚ I would
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AIRBUS/ BOEING ABSTRACT The airline industry is a competitive environment in which a diversified array of stakeholders constantly strives to gain significant shares of the market. Among them are Boeing and Airbus‚ which are two aircraft manufacturers engaged in a fierce and long-standing rivalry. Over the years‚ this rivalry as produced many different products built at a record pace in which safety and money may be cause for concern. The purpose of this paper is to briefly examine the issues
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Advantages of Boeing’s outsourcing strategy * By outsourcing‚ Boeing is able to reduce costs and generate sales. Outsourcing to countries such as India can give the company access to cost-effective services and get access to specialized skills and services. * Boeings’ strategy allowed entry into two of the largest and fastest growing airplane markets (china and India). * It gained the ability to distribute some of the risks associated with large investment required to build an airplane
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The Boeing 7E7 Team 14 Constantine Brocoum Courtney Delia Stephanie Doherty David Dubois Radu Oprea October 15th‚ 2009 Contents Objectives 1 Management Summary 1 Cost of Equity 1 Equity Market Risk Premium 1 Beta 2 Risk Free Rate 2 Capital Structure Weights 2 Boeing 7E7 Project Evaluation 4 Circumstances for an economically attractive project 4 Market Demand 4 Market Share 4 Sensitivity Analysis 4 Conclusion 7 Board approval for the project? 7 Appendices 7 Appendix
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have a direct impact on the variables used in calculating WACC. Such variables include the term structure of interest rate‚ the risk free rate‚ the beta‚ the market risk premium‚ the firm’s marginal tax rate‚ and its capital structure. Since Boeing has two business componentsdefense and commercialfirst begin by determining the unlevered beta for its commercial component. This is accomplished by comparing Lockheed and Northrop’s average unlevered beta which was .48 . The next step is to derive
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3 Case Assignment Boeing: Dreamliner 787 Discuss the nature of the market structure and demand for the Dreamliner. What are the implications for Boeing and its customers? The market structure for the Dreamliner is that of an oligopolistic nature which means there are few air Premium1632 Words7 Pages Boeing Summary Buying an airplane is huge purchase‚ each costing over $ 100 million. There are many factors that have to be considered by the customers. These are customers Boeing deals with every day
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When it comes to investing in the 7E7 project the investors have three major options. The first of these options is to invest in the project with a short term gain in mind. Secondly the shareholder can invest expecting the project to pay off in the long-term. And lastly the prospective shareholder can choose to not invest in the project as a whole. In order to evaluate the profitability of the 7E7 project we are going to calculate the WACC of the project and then compare it to the stated IRR of 15
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segment respectively‚ while Boeing only had 46%of revenues derived from this area; these four companies are not sufficiently similar. In addition‚ the commercial airline segment was depressed by the terrorism events and SARS‚ and the defense segment benefited from the Iraq war; as a result‚ it is too optimistic to use the beta of comparable companies. To take the crisis of the commercial airline market into account‚ it is more appropriate to use the estimated beta of Boeing according to past 60 trading
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1. What are the benefits to Boeing of outsourcing so much work on the 787 to foreign suppliers? What are the potential risks? Benefits: * Outsourcing the state-of-the-art electronics on the flight deck and in the passenger compartments allowed Boeing to reduce the risks associated with this technological gamble; * Boeing was able to negotiate $8 billion in development costs from the partners in return for a share of the work; * Boeing was able to access the expertise of
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