This example is based off a Boeing problem from an older edition of our corporate text book which has been modified by me. I recommend rounding your numbers in millions to make it easier to manage. It is based off the original 777, but updated for a potential new development plane. a. b. C. d. e. f. g. h. i. Assume the new plane requires an initial investment of $45 billion or $45,000 million. The project will be evaluated over 10 years, even though it is expected to deliver planes for much longer than 10 years. Delivery schedule provided is based off the 777 actual deliveries. Delivery Schedule on back side of paper The after-tax terminal value of the project is expected to be $30 billion or $30,000 million, which represents all the rest of the expected cashflows from the project after year 10. The planes will sell for $400 million apiece in year 1. The price is expected to rise by 2% per year after that. Operating costs are expected to be 70% of revenue. Fixed costs are expected to be $100 million per year. Depreciation will be based on a 20-year, straight-line schedule. The tax rate assumed same as above (15%). There is no change in net working capital. 9. Using the cost of capital from above as your discount rate, calculate the NPV of the project. Calculate the IRR of the project. Should Boeing go forward with the project? 10. Graph the NPV profile (NPVs at different discount rates). 11. Graph a sensitivity of NPV to terminal value. What is the breakeven terminal value?