Question
In: Economics
Superior Air Flights is considering the purchase of a helicopter to connect service between its base...
Superior Air Flights is considering the purchase of a helicopter to connect service between its base airport and a new field being built about 30 miles away. The choppers are assumed to be needed for only 6 years until a rapid transit service is completed. Estimates of the two craft under consideration are as follows:
| Birdie | Rooster | |
| First Cost (I) | $95,000 | $120,000 |
| Annual Maintenance (OM) | $3,000 | $9,000 |
| Salvage Value (S) | $12,000 | $25,000 |
| Life in years (n) | 3 | 6 |
Which option is cheaper per year and by how much? Use an interest rate of 10%. Also, what is the cost per mile if the copper flies 150 times between its base airport and new field per year. Show all work.
Solutions
Rahul Sunny answered 3 years agoRelated Solutions
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