Boeing?s Cyber Engagement Center is a technology incubator designed to bring together the best security experts to fight current and evolving cyber threats. As part of that Center, Boeing Airlines is working on developingnew servers that would be used for the corporations? Internet navigational activities and track airplanes. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 10% of the year?s projected sales; for example, NWC0 = 10%(Sales1). The servers would sell for $24,000 per unit and Boeing believes that variable costs would amount to $17,500 per unit. After Year 1, the sales price and variable costs would increase at the rate of inflation of 3%. The company?s non-variable costs would be $1 million at Year 1 and would increase with inflation. The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. Also, the project?s returns are expected to be highly correlated with returns on the firm?s other assets. The firm believes it could sell 1,000 unit per year. The equipment would be depreciated over a 5-year period, using MACRS rates. The estimated market value of the equipment at the end of the project?s 4-year life is $500,000. Boeing?s federal-plus-state tax rate is 40%. Its cost of capital is 10% for average-risk projects, defined as projects with a coefficient of variation (CV) of NPV between 0.8 and 1.2. Low-risk projects are evaluated with a WACC of 8% and high-risk projects at 13%. CLICK HERE FOR MORE INFORMATION ON THIS PAPER? PRICE?..Using an Excel template, please write a short paper (using headers) evaluating whether Boeing should proceed and develop the new server. Your paper should be organized as follows:1. INTRODUCTION: Go to Boeing?s annual report and read the letter to the shareholders. Provide a snapshot of Boeing Airlines (about 1 page, single-spaced with APA citations in parenthetical format and at the end of the paper). You may wish to watch a short video on Boeing?s Cyber Engagement Center: http://www.boeing.com/stories/videos/vid_23_cec.html. 2. CAPITAL BUDGETING ANALYSIS: Referring to Parts 1 ? 5 on the Excel template, discuss NPV, IRR, MIRR, and Payback period. Would you recommend that Boeing proceed with this project? Why or why not? Explain the project?s assumptions. (about 1 ? 1.5 pages)3. NPV PROFILE ANALYSIS: Referring to Part 6 on the Excel template, place the NPV profile graph (and summary table) in this section. Would you accept this project and under what conditions? Please refer to the numbers generated in this section. (about 1 ? 1.5 pages)4. RISK AND SCENARIO ANALYSIS: Referring to Part 7 on the Excel template, calculate expected NPV, coefficient of variation, and the risk-adjusted project metrics (low-risk WACC versus WACC versus high-risk WACC). Present this in a short table. Would you accept this project and under what conditions? (about 1-1.5 pages)5. WACC ANALYSIS: Go to thatswacc.com and look up WACC for Boeing. Where is WACC in relation to 8% ? 13% range presented in this project? (about 1 -2 paragraphs)6. CONCLUSION: Based upon your calculations, would you recommend this project to Boeing? Why or why not? Explain. (about 1 ? 2 paragraphs)7. Works Cited Page Submit your paper (file name LASTNAME-AOL002-NPVProfile.docx) and Excel file (LastName-AOL002-NPVProfile.xlsx) by the deadline. CLICK HERE FOR MORE INFORMATION ON THIS PAPER? PRICE?..
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