The equity market risk premium should equal the excess return expected by investors on the market portfolio. In this case it was calculated to be 8.4%. The weighted average cost of capital (WACC)
was calculated to be 17.8%. Since the projected revenues listed in Exhibit 8 are “well behaved” we can
trust the IRR tables in Exhibit 9. For the project to increase shareholder wealth, the IRR of the project should at least equal the WACC. To achieve this Boeing would have to sell at least 2500 airliners in a 20-year period. Boeing is expecting to reach this unit goal.The financial calculations provided in this report show that there is a very good chance that the project will increase the wealth of the shareholders. There are other risks mentioned above that must be considered but on balance the reasons to go forward with the project outweigh those against it.