Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In an effort to capture the large jet market, Wright Brothers Aviation invested $25 billion developing its 1903A, which is capable of carrying 800 passengers.

In an effort to capture the large jet market, Wright Brothers Aviation invested $25 billion developing its 1903A, which is capable of carrying 800 passengers. The plane has a list price of $300 million. In discussing the plane, Wright Brothers Aviation stated that the company would break even when 300 1903As were sold.

image text in transcribed

In an effort to capture the large jet market, Wright Brothers Aviation invested $25 billion developing its 1903A, which is capable of carrying 800 passengers. The plane has a list price of $300 million. In discussing the plane, Wright Brothers Aviation stated that the company would break even when 300 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 b. Wright Brothers Aviation promised its shareholders a return of 30 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 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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Option Strategies For Earnings Announcements A Comprehensive, Empirical Analysis

Authors: Ping Zhou , John Shon

1st Edition

0132947390,0132947404

More Books

Students also viewed these Finance questions