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Exhibit 9 The Boeing 7E7 Sensitivity Analysis of Project IRRS by Price, Volume, Development, and Production Costs Unit Volume Price Premium Above Expected Minimum Price 10% (First 20 Years) 1,500 1,750 2,000 2,250 0% 5% 15% 10.5% 11.9% 10.9% 11.3% 11.7% 12.3% 12.7% 13.1% 13.0% 13.5% 13.9% 14.4% 14.6% 15.1% 14.1% 15.5% 15.7% 15.2% 16.1% 2,500 16.6% 2,750 3,000 16.1% 16.6% 17.1% 17.6% 17.1% 17.6% 18.1% 18.6% Cost of Goods Sold as a Percentage of Sales 82% Development Costs 78% 80% 84% 21.3% $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000 15.9% 18.7% 12.6% 17.0% 19.4% 14.4% 11.3% 17.9% 15.7% 13.2% 10.3% 9.4% 14.5% 16.6% 12.1% 13.5% 11.2% $10,000,000,000 15.5% 8.6% Note: The IRR consistent with "base case" assumptions is 15.7% and is indicated in italics in the table Source: Case writer analysis.

Exhibit 9 The Boeing 7E7 Sensitivity Analysis of Project IRRS by Price, Volume, Development, and Production Costs Unit Volume Price Premium Above Expected Minimum Price 10% (First 20 Years) 1,500 1,750 2,000 2,250 0% 5% 15% 10.5% 11.9% 10.9% 11.3% 11.7% 12.3% 12.7% 13.1% 13.0% 13.5% 13.9% 14.4% 14.6% 15.1% 14.1% 15.5% 15.7% 15.2% 16.1% 2,500 16.6% 2,750 3,000 16.1% 16.6% 17.1% 17.6% 17.1% 17.6% 18.1% 18.6% Cost of Goods Sold as a Percentage of Sales 82% Development Costs 78% 80% 84% 21.3% $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000 15.9% 18.7% 12.6% 17.0% 19.4% 14.4% 11.3% 17.9% 15.7% 13.2% 10.3% 9.4% 14.5% 16.6% 12.1% 13.5% 11.2% $10,000,000,000 15.5% 8.6% Note: The IRR consistent with "base case" assumptions is 15.7% and is indicated in italics in the table Source: Case writer analysis.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Briefly review the sensitivity analysis that is presented in the case exhibits. Under what circumstances is this project financially attractive? What bets were the company making when they went ahead with the project? DO NOT HAVE TO PERFORM YOUR OWN SENSITIVITY ANALYSIS. YOU ARE TO INTERPRET THE SENSITIVITY ANALYSIS THAT IS GIVEN.

Exhibit 9 The Boeing 7E7 Sensitivity Analysis of Project IRRS by Price, Volume, Development, and Production Costs Unit Volume Price Premium Above Expected Minimum Price 10% (First 20 Years) 1,500 1,750 2,000 2,250 0% 5% 15% 10.5% 11.9% 10.9% 11.3% 11.7% 12.3% 12.7% 13.1% 13.0% 13.5% 13.9% 14.4% 14.6% 15.1% 14.1% 15.5% 15.7% 15.2% 16.1% 2,500 16.6% 2,750 3,000 16.1% 16.6% 17.1% 17.6% 17.1% 17.6% 18.1% 18.6% Cost of Goods Sold as a Percentage of Sales 82% Development Costs 78% 80% 84% 21.3% $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000 15.9% 18.7% 12.6% 17.0% 19.4% 14.4% 11.3% 17.9% 15.7% 13.2% 10.3% 9.4% 14.5% 16.6% 12.1% 13.5% 11.2% $10,000,000,000 15.5% 8.6% Note: The IRR consistent with "base case" assumptions is 15.7% and is indicated in italics in the table Source: Case writer analysis.
Transcribed Image Text:Exhibit 9 The Boeing 7E7 Sensitivity Analysis of Project IRRS by Price, Volume, Development, and Production Costs Unit Volume Price Premium Above Expected Minimum Price 10% (First 20 Years) 1,500 1,750 2,000 2,250 0% 5% 15% 10.5% 11.9% 10.9% 11.3% 11.7% 12.3% 12.7% 13.1% 13.0% 13.5% 13.9% 14.4% 14.6% 15.1% 14.1% 15.5% 15.7% 15.2% 16.1% 2,500 16.6% 2,750 3,000 16.1% 16.6% 17.1% 17.6% 17.1% 17.6% 18.1% 18.6% Cost of Goods Sold as a Percentage of Sales 82% Development Costs 78% 80% 84% 21.3% $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000 15.9% 18.7% 12.6% 17.0% 19.4% 14.4% 11.3% 17.9% 15.7% 13.2% 10.3% 9.4% 14.5% 16.6% 12.1% 13.5% 11.2% $10,000,000,000 15.5% 8.6% Note: The IRR consistent with "base case" assumptions is 15.7% and is indicated in italics in the table Source: Case writer analysis.
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