Should the route be purchased

Reference no: EM132165329

Question: West north Airlines may purchase a New York to London route from Divided Airlines for $1.5M. The new route should generate income of $1.2M, with associated costs of $850K each year for the next 8 years. (Government regulations require all international routes to be rebid in 8 years.) If West north requires a 14% return on all investments, should the route be purchased? Analyze using appropriate IRRs.

Reference no: EM132165329

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