Finance case study

Question A B C D

4. Lockheed Tri Star and Capital Budgeting In 1971, the American aerospace company, Lockheed, found itself in Congressional hearings seeking a $250 million federal guarantee to secure bank credit required for the completion of the L-1011 Tri Star program. The L-1011 Tri Star Airbus was a wide-bodied commercial jet aircraft with a capacity of up to 400 passengers, competing with the DC-10 triject and the A- 300B airbus. Spokesmen for Lockheed claimed that the Tri Star program was economically sound and that their problem was merely a liquidity crisis caused by some unrelated military contracts. Opposing the guarantee, other parties argued that the Tri Star program had been economically unsound and doomed to financial failure from the very beginning