Provide a brief overview of relevant issues and summarize your recommendations. In early 2003, Boeing announced its plans to develop a new airplane (7E7 and 7E7 Stretch) in a market that was facing a sharp squeeze on profits. The decline of the airline industry has been attributed largely to the war in Iraq, international terrorism and fear of the spread of SARS. The development of this new aircraft could perhaps bring Boeing out of its innovation crisis and potentially give it an advantage in the mid-sized aircraft market. Since 1994, Boeing had not put a new plane into production and had failed to complete two commercial projects. aeronautical programs. The company desperately needed an aircraft that would distinguish it from Airbus, its main competitor and market leader. Boeing's vision for the 7E7 was a cost-efficient aircraft that used less fuel, had cheaper operating costs, and flexibility for short- or long-range routes. The new aircraft would be made with cheaper composite parts which would reduce production time from 20 days to 3 days. The new project presented some concerns. The cost efficiency relied on the use of composite materials that had not earned the trust of regulators. Furthermore, Boeing would have to design completely new production methods for this new aircraft. Unfortunately, Boeing has a history of problems with production methods and delivering planes on time. The board also anticipated that development cost estimates would be substantially reduced before approving such a product. The demand in the market was for cheaper, more efficient airplanes, and that ideology had to be part of Boeing's development strategy. Airbus, the market leader, produced airplanes to serve the short, medium and... middle of the paper. .....R and was determined to be in favor. Assuming the numbers used to calculate WACC and IRR are accurate or conservative, the 7E7 project should be successful if the risk factors are effectively controlled by Boeing. However, the most important factor in determining whether or not a project should move forward is the NPV of the project. If the project has a positive NPV, the project should generally go forward. For the Boeing 7E7 project, the NPV is $5,266,550,000 using cash flow data provided through 2037. The NPV is based on the premise that the projected cash flow for the 7E7 project is accurate. According to NPV, Boeing is expected to move forward with the project as it will add value to the stock based on the data collected, with no indication that the 7E7 project will interfere with other projects already underway or potential projects under consideration.