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EXHIBIT 9 Sensitivity Analysis of Project IRR's by Price, Volume, Development Costs and Cost of Goods Sold Unit Volume (First 20 Years) Price Premium 15.66%
EXHIBIT 9 | ||||||||||||||
Sensitivity Analysis of Project IRR's by Price, Volume, Development Costs and Cost of Goods Sold | ||||||||||||||
Unit Volume | ||||||||||||||
(First 20 Years) | Price Premium | |||||||||||||
15.66% | 0% | 5% | 10% | 15% | ||||||||||
1500 | 10.5% | 10.9% | 11.3% | 11.7% | ||||||||||
1750 | 11.9% | 12.3% | 12.7% | 13.1% | ||||||||||
2000 | 13.0% | 13.5% | 13.9% | 14.4% | ||||||||||
2250 | 14.1% | 14.6% | 15.1% | 15.5% | ||||||||||
2500 | 15.2% | 15.7% | 16.1% | 16.6% | ||||||||||
2750 | 16.1% | 16.6% | 17.1% | 17.6% | ||||||||||
3000 | 17.1% | 17.6% | 18.1% | 18.6% | ||||||||||
Development | ||||||||||||||
Costs | COGS / Sales | |||||||||||||
15.66% | 78% | 80% | 82% | 84% | ||||||||||
$6,000,000,000 | 21.3% | 18.7% | 15.9% | 12.6% | ||||||||||
$7,000,000,000 | 19.4% | 17.0% | 14.4% | 11.3% | ||||||||||
$8,000,000,000 | 17.9% | 15.7% | 13.2% | 10.3% | ||||||||||
$9,000,000,000 | 16.6% | 14.5% | 12.1% | 9.4% | ||||||||||
$10,000,000,000 | 15.5% | 13.5% | 11.2% | 8.6% | ||||||||||
Note: The section below gives key assumptions driving the model--varying these assumptions, given in yellow, allows one to test the sensitivity of IRR. | ||||||||||||||
Average % deliveries of total to date of 757 and 767 For First 20 Years | ||||||||||||||
Year | % Deliveries | Year | %7E7 | %7E7 Stretch | ||||||||||
1 | 1.19% | 2008 | 100% | 0% | ||||||||||
2 | 4.32% | 2009 | 100% | 0% | ||||||||||
3 | 2.54% | 2010 | 80% | 20% | ||||||||||
4 | 3.30% | 2011 | 50% | 50% | Year 4-30 (Need to modify Exhibit 8 spreadsheet construction if the 50% is changed) | |||||||||
5 | 3.35% | 2012 | ||||||||||||
6 | 4.16% | 2013 | ||||||||||||
7 | 5.46% | 2014 | ||||||||||||
8 | 4.76% | 2015 | ||||||||||||
9 | 7.41% | 2016 | ||||||||||||
10 | 7.68% | 2017 | ||||||||||||
11 | 8.76% | 2018 | ||||||||||||
12 | 6.59% | 2019 | ||||||||||||
13 | 5.95% | 2020 | ||||||||||||
14 | 4.32% | 2021 | ||||||||||||
15 | 4.59% | 2022 | ||||||||||||
16 | 4.76% | 2023 | ||||||||||||
17 | 5.46% | 2024 | ||||||||||||
18 | 6.00% | 2025 | ||||||||||||
19 | 4.81% | 2026 | ||||||||||||
20 | 4.59% | 2027 | ||||||||||||
21-30 | 4.59% | |||||||||||||
Deliveries in years 1-20 | 2500 | |||||||||||||
Deliveries in years 21-30 | Same as year 20 | |||||||||||||
Development costs | $8,000,000,000 | |||||||||||||
Composition of development costs: | ||||||||||||||
Capital Expenditures | 25% | |||||||||||||
R&D | 75% | |||||||||||||
Timing of development costs | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||
5% | 15% | 50% | 15% | 10% | 5% | |||||||||
Minimum Price of 7E7 in 2002 U.S. $ | 120500000 | |||||||||||||
Minimum Price of 7E7 stretch in 2002 U.S. $ | 144500000 | |||||||||||||
Cheaper operating cost and other features price premium | 5% | |||||||||||||
Service Revenues | ||||||||||||||
Cost of goods sold | 80% | |||||||||||||
GSA percentage | 7.5% | |||||||||||||
R&D | 2.3% | |||||||||||||
Tax Expense | 35% | |||||||||||||
Capital Expenditures | 0.16% | |||||||||||||
Working capital % of sales | 6.7% | |||||||||||||
Inflation | 2% | |||||||||||||
Depreciation | 150% declining balance 20 year, 0 salvage value. Calculations at bottom of exhibit 7 | |||||||||||||
What does sensitivity analysis reveal about the nature of Boeing's gamble on the 7E7??
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