McDonnell Douglas aircraft corporation manufactures the c-17, the newest jet transport used by the U.S. Air Force. The company sells the c-17 for a flyaway cost of $175million per jet. The variable production cost of each c-17 was estimated to be $165Million.

Assume that Mcdonell Douglas had been told up front that the Air Force would only buy only 80 jets. calculate the selling price per jet that the company would have to charge to achieve a target profit (before tax) of $10,000,000 per jet.

1. what would the income or loss be if the company only sold 80 C-17's?
2. because Mcdonell Douglas must provide its stockholders an acceptable return on their investment, how should the company manage the risks of projects such as the c-17 becoming a very big and expensive mistake?