The Boeing 777

The general objective of this case is to exercise students' skills in estimating a weighted-average cost of capital and cost of equity. The specific need to estimate a segment WACC draws on students' abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Thus the case provides a complete menu of capital cost estimation opportunities. Excerpt UVA-F-1017 Rev. Mar. 22, 2018 The Boeing 777 The Boeing 777 will set a new standard for aircraft around the world. With the introduction of the 777, we will be able to offer our airline customers a complete family of Boeing airplanes that meets any seating requirement from approximately 100 to 500 passengers. We believe the 777 will allow us to offer the right product for the changing market requirements of the 1990s and beyond. Shrontz says his mission is raising Boeing's return on equity from the recent average of about 12%. Although Boeing makes money while its main competitors don't, Shrontz isn't satisfied. “We've got to enhance our earnings,” he says. It takes a lot of courage to launch an industrial program in this uncertain economic environment. . . .