Used by the executives and certain service personnel

Assignment Help Financial Management

Reference no: EM131056668

LMC is considering purchase of a new company which may have the need to purchase an executive aircraft used by the executives and certain service personnel. The aircraft costs $1,475,000. LMC tax accountants estimate that the value of the aircraft will be $775,035 with useful life of 6 years. The aircraft will have airfield rental fees of $1500 per month and maintenance costs of $1200 per month. The fixed operating costs have been estimated at $310.00/hours of flight time for the first year, with variable costs of 300/hour for the first year. Operating costs are estimated to increase at 5% per year. The present strategic plan shows the aircraft will be used for 320 hours per year. LMC executives established a MARR of 12%. To date, the 3 executives and 7 service staff will fly approximately 12 times per year, with the flights averaging 600 miles per trip. On average, each flight will have 4 people on board. All LMC staff must fly coach, and the average cost per seat on commercial airlines has been $375/seat for destinations between 300 and 900 miles. Should LMC purchase the airplane? Why or why not? Use AEW calculations to justify your decision.

Reference no: EM131056668

Questions Cloud

What is the expected return of asset : a. What is the expected return of each asset? b. What is the variance of each asset? c. What is the standard deviation of each asset?

Find out the firm d equity beta : The firm D wants to use the information available from its industry to determine its equity beta. Find out the firm D's equity beta. (Hint: use unlever and re-lever procedures)

Describe the possible migration of ancient peoples : Describing the possible migration of ancient peoples; The influence that trade, agriculture, and tools had on movements; and How colonial actions and colonization impacted those among whom the colonists settled.

Performs the equivalent of pthread_once() : To keep the implementation simple, you can ignore possibilities such as init() failing or being canceled when first called from a thread (i.e., it is not necessary to devise a scheme whereby, if such an event occurs, the next thread that calls one..

Used by the executives and certain service personnel : LMC is considering purchase of a new company which may have the need to purchase an executive aircraft used by the executives and certain service personnel. The aircraft costs $1,475,000. LMC tax accountants estimate that the value of the aircraft wi..

Minutes on the viewing platform : On average, 30% of the tourists only visit Level 1 and return to the ground, while 70% visit both levels. On a typical day, the average tourist visiting Level 1 spends 15 minutes on the viewing platform, while the average tourist visiting Level 2..

Write a program that uses sched_setaffinity() : If you have access to a multiprocessor system, write a program that uses sched_setaffinity() to demonstrate this effect, by forcing the processes either onto the same CPUs or onto different CPUs. (Chapter 44 describes the use of pipes.)

What is its estimated value per share : Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Nabor have decided to make their own estimate of the firm's c..

Should portfolio be invested actively using a mixture of two : Should the portfolio be invested actively, passively or using a mixture of the two? (As part of your answer, include definitions of active and passive and examples of each.)

User Account

All Pages