Essay About 7Appendices        7Appendix A        7Objectivesthis Report And 7E7 Case Study

Boeing 7e7 Case Study
Very good.There is an awful lot of good work in the construction of this document:  sensitivity analysis around the WACC values and consideration of other Economic Factors.It did not quite all come together perfectly at the end.See the detailed comments that I have made in the RHS margin.The Boeing 7E7Team 14Constantine BrocoumCourtney DeliaStephanie DohertyDavid DuboisRadu OpreaOctober 15th, 2009ContentsObjectives        1Management Summary        1Cost of Equity        1Equity Market Risk Premium        1Beta        2Risk Free Rate        2Capital Structure Weights        2Boeing 7E7 Project Evaluation        4Circumstances for an economically attractive project        4Market Demand        4Market Share        4Sensitivity Analysis        4Conclusion        7Board approval for the project?        7Appendices        7Appendix A        7ObjectivesThis report seeks to answer the following three questions about the Boeing 7E7 project:What is an appropriate required rate of return against which to evaluate the prospective IRRs from the Boeing 7E7?Please use the capital asset pricing model to estimate the cost of equity.  Which equity market risk premium (EMRP) did you use? Why?What Beta did you use and how did you derive it?Which risk-free rate did you use? Why?Which capital-structure weights did you use? Why?Judged against your WACC, how attractive is the Boeing 7E7 project?Under what circumstances is the project economically attractive?What does sensitivity analysis (your own and/or that shown in the case) reveal about the nature of Boeing’s gamble on the 7E7?Should the board approve the 7E7?Management SummaryThe analysis identifies both risks and benefits associated with undertaking the 7E7 project.  Giving a calculated WAAC of 15.44% for the commercial division of Boeing, the project is feasible and profitable. [a]As you will find, the financial calculations provided in this report show that the project will increase the wealth of the shareholders[b], also identifying the associated risks and how those could be minimized. Assuming the development costs are correctly estimated and the market response is properly gauged, the reasons to go forward with the project outweigh those against it.