Show MoreCase Study of Boeing's Decision to Develop the 777
1. What is an appropriate required rate of return against which to evaluate the prospective IRRs from the Boeing 777?
1a. which beta did you use? Why?
1b. if you used the CAPM, which risk premium and risk free rate did you use? Why?
1c. which capital-structure weights did you use? Why?
i. Key Assumptions for the Calculation:
In order to calculate the appropriate rate of return against which to evaluate the prospective cash flows from the Boeing 777 project, several assumptions had to be made.
First, in order to facilitate the calculations, I referred to betas from Exhibit 9 and selected the value for Boeing calculated in comparison to the S&P 500 Index for the…show more content…
Judged against your WACC, how attractive is the Boeing 777 project?
2a. under what circumstances is this project economically attractive?
2b. what does a sensitivity analysis (either the analysis presented in the case or another that you have done on your own) reveal about the nature of Boeing's gamble on the 777?
From the information given in Exhibit 6 & 7, we can see that Boeing’s analysts are currently projecting a project IRR of 18.9% with the assumed Unit sales volume of 1000, Unit Price of $130M, GS&A expense-to-sales ratio of about 4% and R&D expense-to-sales of 3%. Since the actual WACC is 13.889%, which is less than the expected IRR, the project is economically attractive if Boeings sales and cost assumptions are accurate.
2a: From the chart shown in Exhibit 8, it is obvious that the 777 project becomes less economically attractive as WACC increases. However, since the long term debt accounts only for 1.79% of total market value of debt and equity while the cost of equity accounts for 98.21%, the changes of Boeing’s WACC would be more sensitive to the changes of its cost of equity. Therefore as long as Boeing doesn’t have great increase with its cost of equity, the project would be economically attractive. Since the cost of equity formula is sensitive to
School Counseling: A Case Study in Ethical Decision Making Essay
2469 Words10 Pages
Whilst working in a remote area I observed a year nine indigenous student (Lorena Bannard) and a teacher (Bill James), alone together after school hours. I considered this could be an unprofessional situation. I spoke to Bill later regarding the situation and he replied, “I’m helping her with some family problems, and I’m concerned about the effect it’s having on her school work”. I suggested he refer Lorena to the Guidance Officer. During the initial interview with Lorena, I explained what was talked about in the interview was confidential, unless an unlawful act or event occurred, or if someone could be harmed. (Geldard & Geldard, 2005). I explained to her that as a counsellor I had a duty of care to her, which is part of the…show more content…
Identify the problem
This case had several ethical, legal and professional ramifications, including aspects of cultural differences between non-indigenous and Aboriginal and Torres Strait Islander clients. There is a requirement for counsellors to actively understand the diverse cultural backgrounds, and differences in behaviour of their clients; stated in; The Australian Counselling Association (ACA-Au., 2008); Code of Conduct (2, 2.1), American Counselling Association (ACA, US, 2005), Code of Ethics (A.2c; B.1a; c.2a) and Education Queensland (EQ) Code of Conduct (1994) 2.1.1, and Education Queensland (EQ) (2008) Ethical Code, and Watson, Herlihy & Pierce, 2006.
Confidentiality was explained to Lorena, and also the exceptions in which, confidentiality would have to be breached. Lorena was asked if she understood this, she replied “Yea”. ACA (2005, Section, 188.8.131.52. Breaching the confidentiality and therefore trust between Lorena and myself in this instance, was necessary and unavoidable, ACA, 184.108.40.206, (2008), and 220.127.116.11 and ACA, , B.2a, B.2c(2005).
Bill James had breached the EQ’s (2008) Code of Conduct (18.104.22.168) in suspected breaches of this code, “the principal must be informed immediately of any suspected harm to a student” (p. 5), (EQ) Student Protection Policy, SMS-PR-012; section 365. The Queensland Child Protection Act, (1999),