Answered step by step
Verified Expert Solution
Question
1 Approved Answer
In an effort to capture the large jet market, Wright Brothers Aviation invested $23 billion developing its 1903A, which is capable of carrying 800 passengers.
In an effort to capture the large jet market, Wright Brothers Aviation invested $23 billion developing its 1903A, which is capable of carrying 800 passengers. The plane has a list price of $280 million. In discussing the plane, Wright Brothers Aviation stated that the company would break even when 280 1903As were sold. a. Assuming the break-even sales figure given is the accounting break-even, what is the cash flow per plane? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole dollar amount, e.g.,32.) Cash flow per plane $82142857 b. Wright Brothers Aviation promised its shareholders a return of 25 percent on the investment. If sales of the plane continue in perpetuity, how many planes must the company sell per year to deliver on this promise? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Number of planes to be sold 70 per year c. Suppose instead that the sales of the 1903A last for only 15 years. How many planes must Wright Brothers Aviation sell per year to deliver the same rate of return? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Number of planes to be sold per year
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started