$\LARGE {\beta}^u_{boeing} = W_{commercial} {\beta}^u_{boeing} +W_{defense} {\beta}^u_{defense}$

1) Select a beta for boeing =>
2) Look for 3 defense companies, unlever beta and take average
3) Unlever $\LARGE {\beta}^u_{boeing} = W_{c} {\beta}^u_{c} +W_{d} {\beta}^u_{d}$

Estimate $\LARGE {\beta}^u_{comm}$ =  $\LARGE {\beta}^u_{comm} * (1+(1-t) \frac {D}{E}$
Go  to CAPM:
$\Large K_c R_F + \beta_{comm}^L * (EMRP)$

4) Calculate WACC = $\Large W_D K_D + W_E K_E$

1) Characteristics of aircraft construction
* Capital intensive
* Highly concentrated
** Boeing
** Airbus
** McDonald Douglas
* Very long payback periods
* Long life cycle
* Long sales cycle
* Build to order
* Highly competitive
* Demand dependent on economic cycles, Political events
* High tech product
* Time to market
* Only a fraction of the products make money

The [[ROE]] is 12%: how can this be increased?
* Decrease the equity
** Lever the company
* Increase net income
** Lower cost
** Increase sales price
bag
mbi_public
created
Fri, 04 Feb 2011 17:03:54 GMT
creator
dirkjan
modified
Fri, 04 Feb 2011 17:03:54 GMT
modifier
dirkjan
creator
dirkjan