What Is the Profitability Index of the Boeing 787 Dreamliner

question 77

Multiple Choice

What is the Profitability Index 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 its assembly plant in Everett Washington in December 2007 at a total cost of $7B.Boeing has secured sales of 865 aircraft over the period 2008-2012 for total proceeds of $138.4B ($160M per aircraft) .The cost of building each plane is $140M.Assume that sales (and costs) occur in December of each year.Assume that sales are spread evenly across the five years from 2008-2012.The project cash flows are shown in the table,below.What is the Profitability Index of the project if Boeing's cost of capital is 10%? Calculate the index as of December 1,2007.Ignore taxes.

• A) -1.52
• B) -0.44
• C) 1.06
• D) 1.87
• E) 2.43

---

Definitions:

Magnetic Resonance Imaging

A radiological method for creating images of the body's structure and its physiological activities.

Positron Emission Tomography

An imaging technique used in medical diagnostics that detects pairs of gamma rays emitted indirectly by a positron-emitting radionuclide.

Electrical Stimulation

The application of electrical impulses to nerves or muscles to evoke a response, often used in medical treatment and research.

Computerised Tomography

A medical imaging technique that uses computer-processed combinations of multiple X-ray measurements taken from different angles to produce cross-sectional images of specific areas of a scanned object, allowing the user to see inside the object without cutting.