Boeing collaborated in a strategic alliance with fuji, mitsubishi, and kawasaki in the development and production of the boeing 777 to minimize boeing's financial exposure.what benefit of strategic alliances was boeing seeking?
a) synergy
b) shared risk
c) ease of market entry
d) flexibility of operations

Shared Risk

Explanation: First we need to understand the meaning of financial exposure

•Financial Exposure is the amount of capital that an investor stand to lose when investing in a business. This can also be called Risk

•Risk is the likelyhood that an event will occur

However Risk sharing is a kind of strategic alliance that ensure that an entity or an investor is not the only that will be affected by an adverse effect, that is business loss.

It ensure that cost and consequences are shared among the parties involved. This will reduce the risk burden (financial exposure) of investors involved in such business

Option 1: PV = $400,000
Option 2: Receive (FV) $432,000 in one year

PV = FV(1/(1+i)^n), where i= 8% = 0.08, n = 1 year

PV = 432,000(1/(1+0.08)^1) = $400,000

Option 3: Receive (A) $40,000 each year fro 20 years

PV= A{[1-(1+i)^-n]/i} where, n = 20 years

PV = 40,000{[1-(1+0.08)^-20]/0.08} = $392,725.90

Option 4: Receive (A) $36,000 each year from 30 years
PV = 36,000{[1-(1+0.08)^-30]/0.08} = $405,280.20

On the basis of present value computations above, option 4 is the best option for Kerry Blales. This option has the highest present value of $405,280.20