PLEASE WRITE ONLY ABOUT AMERICAN AIRLINESThe case studies for your Final Project are available as part of your custom e-text in Vital Source. They are listed at the end of the text, and can be located by either searching for the name of the case study using the search function, or by locating the title of the Case in the Table of Contents.American AirlinesMicrosoft CorporationHeinz CorporationThese case studies represent a variety of real-world situations. The American Airlines case addresses revenue management, the Microsoft case looks at how a company maintains market power, and the Heinz case exemplifies how a company deals with competition. Each company is in a different market structure and, therefore, finds itself facing different challenges with different options to meet those challenges.Select one company/case study to focus on for the final project. Each company is in a difficult situation. Your objective is to analyze the situation with regard to which profit-enhancing tools are being used, what type of demand the company is facing, what its cost structure is, and what constraints and opportunities the market environment poses. Ultimately, these are the questions:What led the company to this situation?What would you recommend the company do as the next step?In this journal assignment, craft a preliminary problem statement based on these questions. Your response should demonstrate your understanding of the issue at hand and include discussion of various relevant market factors that may have impact on the problem. Selecting the appropriate economic model to use in your analysis will be important in guiding your research.FOCUS MOSTLY ON THE AREAS IN BOLD. THE ABOVE AREAS SERVE AS A GUIDE. WRITE ONLY ABOUT AMERICAN AIRLINESIn this first milestone assignment for the final project, finalize your statement that defines the problem in the case study you selected in Module One.(AS WRITTEN ABOVE)To accomplish this, you, as a management economics professional, must clearly understand the problem at hand and identify what economic model is appropriate to drive your analysis. In your statement, include a proposal for data collection and analysis. FOCUS ON THESE THREE POINTS- problem. - root causes-economic model

You have an option to purchase all of the assets of the Overland Railroad for $2.5 billion. The option expires in nine months. You estimate Overland’s current (month 0) present value (PV) as $2.7 billion. Overland generates after-tax free cash flow (FCF) of $50 million at the end of each quarter (i.e., at the end of each three-month period). If you exercise your option at the start of the quarter, that quarter’s cash flow is paid out to you. If you do not exercise, the cash flow goes to Overland’s current owners. In each quarter, Overland’s PV either increases by 10% or decreases by 9.09%. This PV includes the quarterly FCF of $50 million. After the $50 million is paid out, PV drops by $50 million. Thus, the binomial tree for the first quarter is (figures in millions):The risk-free interest rate is 2% per quarter. Build a binomial tree for Overland, with one up or down change for each three-month period (three steps to cover your nine-month option). Suppose you can only exercise your option now, or after nine months (not at month 3 or 6). Would you exercise now? Suppose you can exercise now, or at month 3, 6, or 9. What is your option worth today? Should you exercise today, or wait?