One of the conditions on the loans GM and Chrysler received today is that the companies must prove they are “viable.” To do this, they have to have a positive “net present value.” Basically, this is a business calculation that’s done on investments to predict what they will be worth in the future. But as with any calculation, what goes in determines what comes out. If you talk to people who work these equations, there’s a lot of wiggle room. How far in the future? How many cars will be sold? At what price? Given the variables, it’s likely in the case of automakers this will be a political calculation.
So what should the assumptions be on that front? As the economy continues to weaken and more American lose their jobs does that a) generate more desire for the government to step in to save jobs or b) generate less desire for taxpayers to backstop jobs in one industry and not others?
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let them go out of business,they have drained us dry. we DONT need them all our car mfg. build is detroit junk. last year ford tooled up & built the biggest SUV. on the planet.CEOS salarys should be suspended, they have millions dont need more. ALSO: send all the illegal felons back to mexico,yes FELONS & we are kissing their feet. i am a DAV (no pension) & VA wont pull my final 5 teeth.this country ***** & **** them ETC!!!
Jim - Stephanie's on holiday, so I thought I'd answer you. Why don't you check out the great piece Darren Gersh did on December 10, 2008: Valuing U.S. Automakers. The page contains links to various bits of data about automakers. Please note, the professor Darren interviews explains that you can figure net present value, but not with cash flow.
I have a haunting suspician that this economic crisis is another 9-11,
war in Iraq, piped & dreamed up creation..........a manufactured political scheme gone Hollywood for the desired preplanned aganda of one George W for what ever reason he's dreamed up this time........maybe just plain rape of the planet!
I'm a professor of computer information systems at Louisiana Tech in Ruston, LA. I'm planning on giving my class an assignment to analyze the ability of GM to produce a positive net present value within the next few years. I found a summary of their 10K filing for 2007. I'd appreciate information on sources of data for 2008 and possibly realistic projections for 2008. I want my students to be looking at assumptions regarding unit sales, prices, costs, etc. and doing "what if" analyses with various changes that they will propose. Any suggestions would be appreciated.
Bailout + Viability = Merger
Bailout - Viability = Bankruptcy
Either way, the Big 3 US automakers will become 2.
Hasn't anyone see the documentary, "Who Killed the Electric Car?"
I think a public viewing for Bush and Company as well as GM et.al
see this film. Why is everyone acting as if this is all a surprise?