Case Name :      Boeing 777

Authors :           Robert F. Bruner, Dena Gollish, Henrik Clausen, Niels Koggersbol, Peter Christey

Source :             Darden School of Business

Case ID :           UV0003

Discipline :        Finance

Case Length :    26 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

In October 1990, the Boeing Company announced that it was launching a new aircraft model, the 777. The fanfare praised the technological superiority of the product and the fact that it filled a gap in Boeing’s product line. The task for students is to evaluate the 777 against a financial standard, the investors’ required returns. Gives internal rates of return (IRRs) for the 777 project under base-case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial aircraft business segment in order to evaluate these IRRs. As a result of this analysis, students identify the “key value drivers” and distinguish, on a qualitative basis, the key gambles Boeing is making.