Examlex

Solved

What Is the NPV of the Boeing 787 Dreamliner Project

question 35

Multiple Choice

What is the NPV of the Boeing 787 Dreamliner project? The Boeing 787-8 can carry 230 passengers up to 8,200 nautical miles at a cruising speed of mach 0.85.The Dreamliner is more comfortable for passengers because of higher cabin humidity.Boeing completed construction on its final assembly plant at time t = 0 for a total cost of $7B.Boeing has secured orders for 865 aircraft over the next five years (t = 1 to t = 5) for total proceeds of $138.4B ($160M per aircraft) .The cost of building each plane is $140M.Assume that cash flows (sales and costs) occur at the end of each year starting one year after the assembly plant was completed.The project cash flows are shown in the table,below.What is the NPV of the project if Boeing's cost of capital is 10%? Calculate the NPV as of time t=0.(Round answer to the nearest million) .
What is the NPV of the Boeing 787 Dreamliner project? The Boeing 787-8 can carry 230 passengers up to 8,200 nautical miles at a cruising speed of mach 0.85.The Dreamliner is more comfortable for passengers because of higher cabin humidity.Boeing completed construction on its final assembly plant at time t = 0 for a total cost of $7B.Boeing has secured orders for 865 aircraft over the next five years (t = 1 to t = 5) for total proceeds of $138.4B ($160M per aircraft) .The cost of building each plane is $140M.Assume that cash flows (sales and costs) occur at the end of each year starting one year after the assembly plant was completed.The project cash flows are shown in the table,below.What is the NPV of the project if Boeing's cost of capital is 10%? Calculate the NPV as of time t=0.(Round answer to the nearest million) .   A)  $6,116M B)  $8,069M C)  $8,780M D)  $8,967M E)  $13,116M


Definitions:

Notes Receivable

A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.

Allowance Method

The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their write-off.

Receivables

All money claims against other entities, including people, business firms, and other organizations.

Written Off

The process of recognizing that a portion of a company's assets or receivables has decreased in value and is unlikely to be recovered, thus removing it from the balance sheet.

Related Questions