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Author Question: In 1967, Lockheed planned to build a wide-bodied passenger aircraft called the L-1011 Tri Star ... (Read 121 times)

Awilson837

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on: Apr 25, 2021

Question 1

If only one capital budgeting technique could be used to evaluate a project, which of the following would be the most preferred?
◦ Payback
◦ IRR
◦ MIRR
◦ Profitability index
◦ NPV

Question 2

In 1967, Lockheed planned to build a wide-bodied passenger aircraft called the L-1011 Tri Star airbus. The pre-production phase of the Tri Star project was planned to end in 1971 and total $1B. Lockheed planned to sell 35 aircraft per year for six years between 1972 and 1977 with an operating profit of $2M per aircraft. This sales forecast was aggressive as it represented a market share of 45% of the world market for wide-bodied aircraft (which was forecast to be about 80 aircraft per year).
By 1971 the company was in financial distress and had to seek a government bailout.
At the end of 1967, Lockheed had 11.3 million shares outstanding which traded at $70 per share. If the market had known the NPV of the L-1011 project at that time, then what would the stock price have been?
◦ Larger than $70; hard to tell without more information
◦ Much less than $70, as the project clearly had a large, negative NPV
◦ About $70; the NPV of the project was close to zero
◦ $70; the NPV of a project does not affect the stock price
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by Awilson837 on Apr 25, 2021

shewald78

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Awilson837

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Reply 2 on: Apr 25, 2021
Wow, this really help

bassamabas

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Reply 3 on: Yesterday
Excellent

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