Pink Jet Airlines is a relatively new, low-cost commercial carrier who now wants to expand its aircraft fleet. They have shopped-around for aircraft and what they need sells for about $50 million for each aircraft. They have retained your group as investment advisors. Your job is to present various financing alternatives to Pink Jet. Pink jet operates in an ever-changing competitive and economic environment. In the old days, airlines pretty much knew the routes they would be flying many years out, but that's not true anymore. Flexibility is very important these days, so airlines are less willing to lock-in deals that stretch many years out even though flexibility comes at a higher cost. However, Pink Jet is also very interested in how your proposals will impact the financial statements. They already have some debt on their balance sheet, and naturally they would prefer not to have any more. On the other hand, they have no restrictive debt covenants, so they might be receptive to additional debt at the right price and terms. Pink Jet wants to see three financing alternatives, and they have told you that one alternative must be straight debt financing where Pink jet owns the aircraft and another must be a "short-term" operating lease. The third alternative is up to you, but Pink Jet has mentioned convertible debt as a possibility. Another possibility is a capital lease, but that would be attractive only if it afforded off-balance sheet treatment. Pink Jet analyzes investment opportunities based on net present value of after-tax cash flows. Pink Jet is profitable, and they project taxable income well into the future, i.e., they could use the tax benefits of ownership. Pink Jet will tolerate some risk, but they will balk at what they think is excessive financial risk, and that includes accounting risk as well as economic risk. Proposal should be addressed to Pink Jet's management team and include the following:

1. Comprehensive written report including objective, assumptions, results and conclusions

2. Attached appendices of all calculations contained in the main report supporting your conclusions

3. Slide Power point presentation that would be used to present your conclusions and findings.