Examlex

Solved

The Boeing Corp

question 54

Multiple Choice

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
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   A)  $1,584M B)  $1,709M C)  $1,945M D)  $2,400M E)  $2,525M


Definitions:

Dissatisfied Customer

A consumer who is unhappy with the goods or services received from a business.

Trade-offs

Situations where a gain in one area requires a loss in another, often involving decisions that balance out different factors or outcomes.

Law

A set of regulations developed and implemented by social or government bodies to control actions.

Statutory Interpretation

The process by which courts analyze aspects of a statute that are unclear or ambiguous or that were not anticipated at the time the legislature passed the statute.

Related Questions