CASE Qantas (ASX: QANDis currently working on a 10-year upgrade plan with Airbus. The plan is trying to retire 5 existing aircrafts and purchase 10 new aircrafts in 2019. The new plane's purchase price is $80 million USID and the old planes were purchased at $40 million USD 15 years ago. Both old and new planes can be used for 20 years. QAN is conducting a prime-cost depreciation to zero over 20 years' life. If you are disposing the old planes now, the salvage value will be S5 million USD. The management team believes that at the end of the first year of the project they could earn pre-tax revenues of $100 million, $200 million the following year, S300 million in the third year, $200 million from thoe fourth to the ninth year, and $100 million for the last year. The average corporate tax rate paid by QAN is 26%. 1. Data Collection: Collect the following information for QAN from Bloomberg Terminal: beta, risk free rate, cost of debt, and capital structure information (debt and equity structure). Describe your data collection process in around 100-150 words, and compare the statistics for QAN with its peer such as Virgin Australia and its industry average. 2. Cost of Equity: Use Capital Asset Pricing Model to compute the required rate of return for QAN's equity. 3. Cost of Capital: Use the capital structure information you obtain from Bloomberg Terminal to compute the weighted cost of capital for QAN Compare your WACC with the WACC computed by Bloomberg Comment on your results in less than 50 words. 4. Project Evaluation: Using the information in the background section, conduct a rigorous capital budgeting analysis and comment on the feasibility of Qantas' the 10-year upgrade plan. Make sure to include your analysis on project cash flows for year 0 to year 10. Keep in mind, as there is no disposal of the airplanes in year 10 you do not need to deal with salvage value or gain/loss on sale. CASE Qantas (ASX: QANDis currently working on a 10-year upgrade plan with Airbus. The plan is trying to retire 5 existing aircrafts and purchase 10 new aircrafts in 2019. The new plane's purchase price is $80 million USID and the old planes were purchased at $40 million USD 15 years ago. Both old and new planes can be used for 20 years. QAN is conducting a prime-cost depreciation to zero over 20 years' life. If you are disposing the old planes now, the salvage value will be S5 million USD. The management team believes that at the end of the first year of the project they could earn pre-tax revenues of $100 million, $200 million the following year, S300 million in the third year, $200 million from thoe fourth to the ninth year, and $100 million for the last year. The average corporate tax rate paid by QAN is 26%. 1. Data Collection: Collect the following information for QAN from Bloomberg Terminal: beta, risk free rate, cost of debt, and capital structure information (debt and equity structure). Describe your data collection process in around 100-150 words, and compare the statistics for QAN with its peer such as Virgin Australia and its industry average. 2. Cost of Equity: Use Capital Asset Pricing Model to compute the required rate of return for QAN's equity. 3. Cost of Capital: Use the capital structure information you obtain from Bloomberg Terminal to compute the weighted cost of capital for QAN Compare your WACC with the WACC computed by Bloomberg Comment on your results in less than 50 words. 4. Project Evaluation: Using the information in the background section, conduct a rigorous capital budgeting analysis and comment on the feasibility of Qantas' the 10-year upgrade plan. Make sure to include your analysis on project cash flows for year 0 to year 10. Keep in mind, as there is no disposal of the airplanes in year 10 you do not need to deal with salvage value or gain/loss on sale