Question: An airline requires a new passenger jet. There are two potential suppliers: Awesome Jets and Breathtaking Jets. Both companies have a jet that fits the airlines requirements. These jets are almost identical and so have the same capacity, operating expenses, and expected salvage value. The price of the jet from Awesome Jets is $58,000,000, while the price of the jet from Breathtaking Jets is $61 000000. Whichever jet the airline buys will be kept for 6 years and will then be sold on the second hand jet market to a smaller discount airline. The airline considers the risk free investment rate to be 0.02, and after adding a risk premium of 0.17 to allow for the risk involved in running aircraft operations it uses 0.19 as its yearly discount rate.

Price: $2.99

Solution: The downloadable solution consists of 1 pages
Deliverable: Word Document