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Boeing plans to give American Airlines (AA) an option to buy wide-body 9W9 aircraft at the end of three years for $200 million, and the
Boeing plans to give American Airlines (AA) an option to buy wide-body 9W9 aircraft at the end of three years for $200 million, and the price of 9W9 aircraft today is $180 million. The life of the aircraft is 20 years. Boeing's business consists of 50% In commercial aircraft and 50% in defense projects. The volatility for Boeing stock is 3% per month. Airbus is 100% in the commercial aircraft business. The volatility for Airbus stock is 5% per month. The 3-year risk-free rate is 3% per year, and the twenty-year rate is 5% per year.
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This option is a call option for Boeing as it gives American Airlines the right to buy the widebody ...
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Financial Accounting an introduction to concepts, methods and uses
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
13th Edition
978-0538776080, 324651147, 538776080, 9780324651140, 978-0324789003
