Assignment:
Q1. Boeing Commercial Airplane Company manufactures all its planes in the United States and prices them in dollars, even the 50% of its sales destined for overseas markets. What financing strategy would you recommend for Boeing? What data do you need?
Q2. United Airlines inaugurated service to Japan and wants to finance the purchase of Boeing 747s to service that route. The CFO for United is attracted to yen financing because the interest rate on yen is 300 basis points lower than the dollar interest rate. Although he does not expect this interest differential to be offset by yen appreciation over the 10-year life of the loan, he would like an independent opinion before issuing yen debt.
a. What are the key questions you would ask in responding to UAL’s CFO?
b. Can you think of any other reason for using yen debt?
c. What would you advise him to do, given his likely responses to your questions and your answer to Part b?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.