Lockheed Tristar Programme

DCF Analysis of the Lockheed Tristar Programme

Assuming planned production of 210 units ($ millions)
Annual Production 35
Year t Investment Production cost Revenues Total Cash Flow
1967 0 ($100) ($100)
1968 1 ($200) ($200)
1969 2 ($200) ($200)
1970 3 ($200) 140 ($60)
1971 4 ($200) ($490) 140 ($550)
1972 5 ($490) 560 $70
1973 6 ($490) 560 $70
1974 7 ($490) 560 $70
1975 8 ($490) 560 $70
1976 9 ($490) 420 ($70)
1977 10 420 $420
Total ($900) -2940 3360 ($480)
NPV ($584.05)

Lockheed Tristar Programme

DCF Analysis of the Lockheed Tristar Programme

Assuming planned production of 300 units ($ millions)
Production 50
Year t Investment Production cost Revenues Total Cash Flow
1967 0 ($100) ($100)
1968 1 ($200) ($200)
1969 2 ($200) ($200)
1970 3 ($200) 200 $0
1971 4 ($200) ($625) 200 ($625)
1972 5 ($625) 800 $175
1973 6 ($625) 800 $175
1974 7 ($625) 800 $175
1975 8 ($625) 800 $175
1976 9 ($625) 600 ($25)
1977 10 600 $600
Total ($900) -3750 4800 $150
NPV ($274.38)

Evaluation of Tri Star Programme in 1970

($ millions)
Production 35
Year t Investment Production cost Revenues Total Cash Flow
1970 0 140 $140
1971 1 ($200) ($490) 140 ($550)
1972 2 ($490) 560 $70
1973 3 ($490) 560 $70
1974 4 ($490) 560 $70
1975 5 ($490) 560 $70
1976 6 ($490) 420 ($70)
1977 7 420 $420
Total ($200) ($2,940) 3360 $220
NPV $17.73

Assumptions

$700 million of the $900 million in pre-production cost is already sunk.

Future annual slaes volume of 210 units

Any deposit (Here $140 million )received already are not sunk in that they would have
to be repaid if the Tristar Programme is to be cancelled.