Despite being a quiet, efficient, easy to handle wide-body aircraft with a stellar safety record of the five fatal accidents involving Ls, only one was due to a problem with the aircraft the Tri-Star program was unable to overcome its late entry into the commercial market, and Lockheed announced in production would end with the th and last L on order in Since then, the Lockheed Tri-Star has become a classic business school case study in finance. In this paper, it is shown that a positive Net Present Value for the Tri-Star was, in fact, achievable but requires one to depart from the oft-linear and sometimes limited vision from the standard MBA playbook. The case study method forces a person to define-and-solve the problem within the historic time frame in which the case takes place by utilizing given background information as well as supplemental data gathered from independent research.
Rainbow Products is considering the purchase of a paint-mixing machine to reduce labor costs. Should Rainbow purchase it? Assume that all cash flows except the initial purchase occur at the end of the year, and do not consider taxes. Should Rainbow Products purchase the machine with the service contract?
What should Rainbow Products do? Edleson prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. To order copies or request permission to reproduce materials, callwrite Harvard Business School Publishing, Boston, MAor go to http: No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Suppose you own a concession stand that sells hot dogs, peanuts, popcorn, and beer at a ball park.
You have three years left on the contract with the ball park, and you do not expect it to be renewed. Long lines limit sales and profits. You have developed four different proposals to reduce the lines and increase profits. The first proposal is to renovate by adding another window. The second is to update the equipment at the existing windows.
These two renovation projects are not mutually exclusive; you could take both projects. The third and fourth proposals involve abandoning the existing stand. The third proposal is to build a new stand.
The fourth proposal is to rent a larger stand in the ball park. The incremental cash flows associated with each of the proposals are: Using the net present value rule NPVwhich proposal s do you recommend? Which rule is better?
The form and timing of the subsidy have not been determined, and depend on which investment criterion is used by MBAT. In preliminary discussions, MBAT suggested four alternatives: Subsidize the project to provide a two-year payback. This is defined as: Subsidy payments need not occur right away; they may be scheduled in later years if appropriate.
Please indicate how much of a subsidy you would recommend for each year under each alternative suggested by MBAT. You will raise the necessary capital for this investment by issuing new equity. How many shares of common stock must be issued at what price to raise the required capital?HBS case: Investment Analysis and Lockheed Tri Star HBS: Investment Analysis and Lockheed Tri Star • Pre-production costs estimated at $ million incurred between and Harvard Business School Rev.
November 17, Investment Analysis and Lockheed Tri Star 1. Rainbow Products is considering the purchase of a paint-mixing machine to reduce labor costs. The savings are expected to result in additional cash flows to Rainbow of $5, per year.
The Lockheed L Tri-Star, a tri-jet wide body aircraft introduced in the early s, was regarded as a technical marvel whose commercial success was severely limited by financial and developmental problems with Rolls . Harvard Business School Rev. November 17, Investment Analysis and Lockheed Tri Star 1.
Rainbow Products is considering the purchase of a paint-mixing machine to reduce labor costs.
Harvard Business School Rev. November 17, Investment Analysis and Lockheed Tri Star 1. Rainbow Products is considering the purchase of a paint-mixing machine to reduce labor costs. Rainbow Products is considering the purchase of a paint-mixing machine to reduce labor costs.
Investment Analysis and Tri Star Lockheed - FULL FINAL - Download as Word Doc .doc /.docx), PDF File .pdf), Text File .txt) or read online. Scribd is the world's largest social reading and publishing site.5/5(1).