“Airbus vs. Boeing in Super Jumbos: A Case of Failed Preemption”

Appendix 2Valuation of Quasi-rents on the Boeing 7471 2 3 4 5 6 7 8 9 10 11 12 13 14 152000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Unit Sales (5 yr avg 95-99) 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38Price $165.0 $168.3 $171.7 $175.1 $178.6 $182.2 $185.8 $189.5 $193.3 $197.2 $201.1 $205.2 $209.3 $213.4 $217.7Revenue $6,270.0 $6,395.4 $6,523.3 $6,653.8 $6,786.8 $6,922.6 $7,061.0 $7,202.3 $7,346.3 $7,493.2 $7,643.1 $7,796.0 $7,951.9 $8,110.9 $8,273.1Price inflation 2%Margins 20.0%Oper Margin $1,254.0 $1,279.1 $1,304.7 $1,330.8 $1,357.4 $1,384.5 $1,412.2 $1,440.5 $1,469.3 $1,498.6 $1,528.6 $1,559.2 $1,590.4 $1,622.2 $1,654.6Tax Rate 34%After-tax CF $827.6 $844.2 $861.1 $878.3 $895.9 $913.8 $932.1 $950.7 $969.7 $989.1 $1,008.9 $1,029.1 $1,049.6 $1,070.6 $1,092.1Discount rate 9.0% = Boeing's WACC for Commercial AirlinesDiscount Factor 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275Present Value $759.3 $710.5 $664.9 $622.2 $582.3 $544.9 $509.9 $477.1 $446.5 $417.8 $391.0 $365.9 $342.4 $320.4 $299.8NPV$7,454.8# of planes sold per yearOperating Margin$7,454.8 20 25 30 35 38 40 45 $7,454.8 10% 15% 20% 25%5.0% $981 $1,226 $1,471 $1,717 $1,864 $1,962 $2,207 7.0% $4,239 $6,359 $8,478 $10,598Operating 10.0% $1,962 $2,452 $2,943 $3,433 $3,727 $3,924 $4,414 8.0% $3,971 $5,956 $7,942 $9,927Margin 15.0% $2,943 $3,678 $4,414 $5,150 $5,591 $5,885 $6,621 9.0% $3,727 $5,591 $7,455 $9,31817.5% $3,433 $4,291 $5,150 $6,008 $6,523 $6,866 $7,725 WACC 10.0% $3,506 $5,259 $7,012 $8,76520.0% $3,924 $4,904 $5,885 $6,866 $7,455 $7,847 $8,828 11.0% $3,305 $4,957 $6,609 $8,26225.0% $4,904 $6,131 $7,357 $8,583 $9,318 $9,809 $11,035 12.0% $3,121 $4,681 $6,241 $7,80213.0% $2,952 $4,429 $5,905 $7,38147