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The Boeing Corp.is considering building a new aircraft,the 787--larger than the 747 and larger than the Airbus A380.The company's Renton WA Facility,where 747s are currently manufactured,would have to be expanded.Expansion costs are forecast to be $2.5B,incurred at t = 0.Also at time t = 0,before production begins,inventory will be increased by $1.855B.Assume that this inventory is sold at the end of the project at t = 2.The first sales from operation of the new plant will occur at the end of year 1 (t = 1) .Boeing forecasts sales of 220 planes in each of the two years.The plane will be sold for $130M each.The cost of manufacturing a plane is $115M.Annual overhead expenses are $775M.The construction facilities are classified as 15 year property.When the plant is closed it will be sold for $1B.The company is in the 34% marginal tax bracket.Boeing's cost of capital is 12%.What are the operating cash flows at the end of Year 1 (t = 1) ?
MACRS Depreciation Rates
Frontal/Coronal Section
A type of anatomical view or slice that divides the body or organ into anterior and posterior parts.
Oblique Section
A slice made through a structure or tissue at an angle other than 90 degrees to its axis, providing a cross-sectional view.
Transverse Section
A transverse section refers to a cut made along a plane that divides the body or organ horizontally into upper and lower parts.
Superior Vena Cava
A big vein that transports blood lacking oxygen from the body's upper section to the right atrium of the heart.
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