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Item Cost Initia! cost $12,000,000 Service life 15 years Salvage value $2,000,000 Crew costs per year $225,000 Fuel cost per mile $1.10 Landing fee $250 Maintenance costs per year $237,500 Insurance costs per year $166,000 Catering cost per passenger round trip $75

Item Cost Initia! cost $12,000,000 Service life 15 years Salvage value $2,000,000 Crew costs per year $225,000 Fuel cost per mile $1.10 Landing fee $250 Maintenance costs per year $237,500 Insurance costs per year $166,000 Catering cost per passenger round trip $75

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A corporate executive jet with a seating capacity of 20 has the following cost factors:

The company flies three round trips from Boston to London and back per
week. a distance of 3.280 miles one way. How many passengers must be carried on an average round trip in order to justify the use of the jet if the alternative commercial airline first-class round-trip fare is $3,400 per passenger? The firm's MARR is 15%. ( Ignore income-tax consequences.)

Item Cost Initia! cost $12,000,000 Service life 15 years Salvage value $2,000,000 Crew costs per year $225,000 Fuel cost per mile $1.10 Landing fee $250 Maintenance costs per year $237,500 Insurance costs per year $166,000 Catering cost per passenger round trip $75
Transcribed Image Text:Item Cost Initia! cost $12,000,000 Service life 15 years Salvage value $2,000,000 Crew costs per year $225,000 Fuel cost per mile $1.10 Landing fee $250 Maintenance costs per year $237,500 Insurance costs per year $166,000 Catering cost per passenger round trip $75
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