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1 2 - 1 5 REPLACEMENT CHAIN Rini Airlines is considering two alternative planes. Plane A has an expected life of 5 years, has an
REPLACEMENT CHAIN Rini Airlines is considering two alternative planes. Plane A has an expected life of years, has an aftertax cost of $ million, and will produce aftertax cash flows of $ million per year. Plane B has a life of years, has an aftertax cost of $ million, and will produce aftertax cash flows of $ million per year. Rini plans to serve the route for years. The companys WACC is If Rini needs to purchase a new Plane A the aftertax cost will be $ million, but cash inflows will remain the same. Should Rini acquire Plane A or Plane B Explain your answer.
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