Ondi Airlines is interested in acquiring a new aircraft to service a new route. The route will be from Tulsa to Denver. The aircraft will fly one round trip daily except for s
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Description
Problem 14-39
Ondi Airlines is interested in acquiring a new aircraft to service a new route. The route will be from Tulsa to Denver. The aircraft will fly one round-trip daily except for scheduled maintenance days. There are 15 maintenance days scheduled each year. The seating capacity of the aircraft is 150. Flights are expected to be fully booked. The average revenue per flight (one way) is 235. Annual operating cost of the aircraft follow:
Fuel -- 1, 750,000 Flight personnel -- 750,000 Food and beverages -- 100,000 Maintenance -- 550,000 Other -- 100,000 Total 3,250,000
The aircraft will cost 120,000,000 and has an expected life of 20 years. The company requires a 12% return. Assume there are no income taxes.
Required:
- Calculate the NPV for the aircraft. Should...
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Published On:
07/07/2019
Last Updated:
07/07/2019
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3 page(s)
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ondi-airlines-is-interested-in-acquiring-a-new-aircraft-to-service-a-new-route-the-route-will-be-from-tulsa-to-denver-the-aircraft-will-fly-one-round-trip-daily-except-for-s-84.docx
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