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Author Question: What is the NPV of the F-22 Raptor project? The Lockheed Martin/Boeing F-22 Raptor is a stealth ... (Read 94 times)

rayancarla1

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What is the NPV of the F-22 Raptor project? The Lockheed Martin/Boeing F-22 Raptor is a stealth fighter aircraft. It was designed primarily as an air superiority fighter, but it is also capable of ground attack and other roles. Lockheed Martin Aeronautics is the prime contractor and is responsible for the majority of the airframe, weapon systems and final assembly. Lockheed Martin invested over $10B on design and manufacturing for the aircraft. Assume that those investments were paid for on Jan 1, 2003. Each aircraft will be sold for $350M and the variable cost of building each airplane is $300M. Assume that 70 aircraft will be sold each year for 5 years. Assume that revenues and costs occur at year-end. (So 2003 revenues and costs are incurred on Dec 31, 2003. See the table of cash flows, below.) What is the NPV of the project if Lockheed-Martin's cost of capital is 10%? (Assume that there are no taxes.)

DateInvestmentsRevenuesCosts
Jan. 1, 2003$10B
Dec. 31, 2003$24.5B$21B
Dec. 31, 2004$24.5B$21B
Dec. 31, 2005$24.5B$21B
Dec. 31, 2006$24.5B$21B
Dec. 31, 2007$24.5B$21B

◦ $3,500,000
◦ $3,267,754
◦ $5,243,412
◦ $13,267,75
◦ $82,874,276


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Marked as best answer by rayancarla1 on Apr 25, 2021

HandsomeMarc

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rayancarla1

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Reply 2 on: Apr 25, 2021
Excellent


komodo7

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Reply 3 on: Yesterday
Great answer, keep it coming :)

 

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