Solved

What Is the Payback Period for the Airbus A380 Project

Question 32

Multiple Choice

What is the payback period for the Airbus A380 project? The Airbus A380 is the largest civilian aircraft ever built.It can carry 555 passengers on two decks.Initial project investments were $13B.Assume that the initial investment was paid on Dec 31,2008.Assume that Airbus will produce 60 aircraft per year for five years.Each aircraft will be sold for $230M and total operating costs are 75% of revenues.Assume that revenues and costs occur at year-end with the first revenues (and costs) occurring on Dec 31,2009.Ignore taxes and assume that there are no terminal year cash flows.Select the earliest year such that the initial investments are completely paid off.


A) 3 years
B) 4 years
C) 5 years
D) The project is not paid off in this time frame.
E) Need the cost of capital to answer this question.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents