Boeing Case Study

Topics: Weighted average cost of capital, Boeing 787, Price Pages: 2 (376 words) Published: April 15, 2013
Executive Summary of Financial analysis for
Boeing 7E7 ‘Dreamliner’
The proposed design and selling of the 7E7 represents an innovation in enhanced fuel usage, low maintenance and a possibility of opening another 400 possible flying routes; This allows Boeing to come in against the forerunner in the medium sized category and to come out with a better plane, better sales and most importantly adding a lot of value to the shareholders.

This report gives an in-depth analysis about what could possibly happen, with a simulation test, what the extremities are of this situation weather it should go great or terrible, scenario and sensitivity test, the most likely Net Present Value (NPV) that is expected to occur and will take in to account a series of qualitative factors that have been relevant over the past years and will be effecting the market today.

All of the reports analysis’ where found using the company’s Weighted Average Cost of Capital (WACC) which was found using the unlevered beta approach and calculated to be 11.56%. The NPV found inside this report at $2,420.75million was found by randomising all variable factors including: Development cost, Sales Price, COGS and volume sold. With these random variables in place a simulation test of over 2000 iterations returned 72% chance that the NPV would either reach 0 or would be higher. Not only did varying these important variables show an expected NPV it also showed some of the more sensitive variables which by the most concern where Sales price and the Development costs, either of these changing could reflect a very significant change in the NPV if all other factors where to stay the same.

The Numbers have looked fine to go ahead with the Boeing 7E7 case so far however the qualitative factors after 911 have been huge on the Airline business, not only is 911 affecting the numbers per flight but also SARS in China.

This report should provide enough evidence through...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • P and H Study Case Essay
  • Boeing Perrier Case Study Essay
  • case study Essay
  • case study Essay
  • case study Essay
  • Case Study Essay
  • CASE STUDY Essay
  • Case Study Research Paper

Become a StudyMode Member

Sign Up - It's Free