The Airbus A220 has the following investments in R&D (in millions, all negative cash flows):...
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The Airbus A220 has the following investments in R&D (in millions, all negative cash flows):
Year 1: $300M Year 2: $250M
Each plane will be sold for $20M - 20% down and 80% due on delivery one year later. The cost to produce each plane is $15M - these costs are recognized on delivery. The Sales and Marketing Department says that you will sell 20 planes (year 3), 30 planes (year 4), 50 planes/year (years 5-9), and 75 planes (year 10). What are the NPV and IRR of the A220 using a 13% discount rate?
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