In an effort to capure the large jet market, Wright Brothers Aviation invested $

Question

In an effort to capure the large jet market, Wright Brothers Aviation invested $28 billion developing its 1903A, which is capable of carrying 800 passengers.  The plane has a list price of $330 million.  In discussing the plane, Wright Brothers Aviation stated that the company would break even when 330 1903As were sold.  

Assuming the break even sales figure given is the cash flow break even, what is the cash flow per plane?Enter your answer in dollars not millions of dollars .  Round your answer to the nearest whole dollar amount.

Wright Brother Aviation promised its shareholders a 25 percent rate of return on the investment.  If sales of the plane continue in perpetuity, how many planes must the company sell per year to deliver on this promise.  Round your answer to 2 decimal places.

Suppose instead that the sales of the 1903A last for only 10 years.  How many planes must Wright Brother Aviation sell per year to deliver the same rate of return?Round your answer to 2 decimal places.

Please show your work.

Explanation / Answer

Breakeven occurs when the they get back the money invested. Investment= $28,000,000,000 Planes Sold to breakeven=330 Cash Flow per plane to breakeven= $28,000,000,000/330 =$84,848,485 25% return on investment= 25/100*$28,000,000,000 =$7,000,000,000 Planes to be sold for 25% RoI= Money Required for 25% RoI/Cashflow for 1 plane =$7,000,000,000/$84,848,485 =82.5 If the sales only last for 10 years, no. of planes sold per year=82.5/10 =8.25 planes

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