USE EXCEL SPREADSHEET

Boeing is looking to introduce a new jet, the 797, set to be available for purchase in 5 years. Accounting for all of the uncertainty in the aviation market they have come up with some estimated yearly revenues, displayed in the model below starting when it is purchased. This project will require a $200 million initial investment and profits will not begin until the plane is available for purchase. What is the NPV of this project, and should Boeing build this jet if they have a cost of capital of 14% and the life of the project is 20 years? Annual Revenue Probability $95,000,000 65% $80,000,000 20% $65,000,000 12% $45,000,000 3%