is to evaluate the 777 against a financial standard. The case gives internal rates of return (IRRs) for the 777 project base case and alternative forecasts. The principal analytical problem of the case is an estimation of a weighted average cost of capital (WACC) for Boeing’s commercial aircraft division in order to evaluate these IRRs. The analysis should also identify ‘key value drivers’ and distinguish, on a qualitative basis, the key gambles Boeing is making. Capital budgeting projects
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dividends, and/or interest earnings. This may or may not be backed by research and analysis. Most or all forms of investment involve some form of risk, such as investment in equities, property, and even fixed interest securities which are subject, among other things, to inflation risk. It is indispensable for project investors to identify and manage the risks related to the investment. Investment Management Investment management is the professional asset management of various securities (shares, bonds
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AY2011-12 TERM 2 MGMT104 ENTREPRENEURIAL MANAGEMENT Prof. Tan Wee Liang Group Report Done by: Audrey LOW Hui Xin Justus WEE Rui Hao LUO Jingwei Nicolas Olivier Valentin VILMIN TEO Wei Xin Entrepreneurial Management Group Report 1 Contents Abstract ........................................................................................................................................................ 4 Introduction ...........................................................
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especially when the companys equity is worth little. Fritz Henderson, who named CEO of Gm on march 30,2009, was a numbers guy, but he knew the companys culture had to change. His vision of the new organizational culture revolved around four guidelines: risk taking, accountability, speed, and costumer-product focus. The problem was that GM had tried before to reinvent itself, with mixed success. “GM’s past is littered with the buzzords of culture change. It has struggled to impose cultural change across
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cost is the difference between the value of one action and the value of the best alternative. An opportunity cost provides an indication of the relative importance of a decision. When the opportunity cost is small, the cost of an incorrect choice is small. Similarly, when the opportunity cost is large, the cost of not making the best choice is large. Suppose you sell a car for $7,200 without much forethought. You find out the next day that the car could have been sold for $7,300. You have
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Chapter 7: * Merger: a strategy through which two firms agree to integrate their operations on a relatively co-equal basis * Acquisition: a strategy through which one firm buys a controlling, or 100% interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio. After acquisition, management of the acquired firm report s to the management of the acquiring firm * Takeover: a special type of acquisition when the target firm did not solicit
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9. The key to organizational architecture is: A. assignment of decision rights, reward structure and evaluation systems B. the methods of rewarding (paying) top management C. a complicated structure of performance evaluation systems D. the initial establishment of golden parachutes for top management 10. The authors argue that successful corporations assign decision rights in ways that: A. effectively link decision-making authority with good information. B. structure moneymaking tools
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CHAPTER 1 Introduction to Corporate Finance Compensation of corporate executives in the United States continues to be a hot-button issue. It is widely viewed that CEO pay has grown to exorbitant levels (at least in some cases). In response, in April 2007, the U.S. House of Representatives passed the “Say on Pay” bill. The bill requires corporations to allow a nonbinding shareholder vote on executive pay. (Note that because the bill applies to corporations, it does not give voters a “say on
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two teams are praying for the meeting to end. The two senior execs have not joined efforts for the new product idea that initially seemed so exciting in previous communications they had via email. On the other hand, they do not wish to leave the meeting without making a decision. Time passes, and at one point, a new junior staffer tosses out an idea: Why not make a European project out of it? The idea was accepted with relief by all—especially the two RTD managers—and after almost a year, a
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* Real life decision making is not rational * “Sunk cost bias” – violates economic assumption of reality * ex: $20 auction * Escalation * Influences of Escalation * Project features encourage it * Psychological factors encourage it * Social factors encourage it * Structural factors encourage it * ex: Vietnam war – committed large number of troops to combat * Reduce escalation of commitment * Separate initial decision-makers from
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