Question
How do you do all parts in excel. One of the documents on this website doesn't have the breakdown of what cells formulas to use.
How do you do all parts in excel. One of the documents on this website doesn't have the breakdown of what cells formulas to use.
Boeing announced the production of a new passenger aircraft in the wake of the Boeing 737 MAX debacle.The new plane project was an enormous undertaking, and much of the preliminary work has already been done.Research and development began two and a half years earlier and cost about $5 billion.Production facilities and personnel training would require an additional $2 billion, and an additional $1.7 billion in working capital would begin in six years. The Exhibit 1 provides profit, depreciation, and capital expenditure projections for the project.
Also, the financial analysis team has the following data for Boeing:
Boeing's beta1.56
Boeing's market-value debt ratio0.09
Boeing's new issue rate for long-term debt4.75%
Riskless return3.75%
Market risk premium5.00%
Boeing's marginal income tax rate21%
Please answer the following questions:
1.What are the after-tax cash flows for the project?
2.What are the cost of equity capital and the weighted average cost of capital (WACC) for Boeing?
3.What are the NPV, IRR, MIRR, payback period, and discounted payback period for Boeing's new plane?
4.Construct an NPV profile like Figure 9-3 in the textbook, including titles for the axes and the graph's name.
5.Based on your analysis in #2 and #3, would you undertake the plane project?Why?
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