18. The president's jet is not fully utilized . At its current low rate of use , it lasts 5 years . The company plans to replace the current jet at the end of year 2. The cost of a new jet is $1. 1 million .\\ The company is proposing to allow other officers to use the plane . This would increase cash operating costs by $25, 000 per year , but would save $100,000 per year in airline bills. However , with the Increased use , the company will need to replace the jet at the end of year 1 . Instead of at the end of year 2. ( The company always replaces planes when they expire. ) Furthermore , with increased use , the plane will last only A years . If the cost of capital is 10%6 , calculate the NFLof allowing other officers to use the plane , ( 16 ) The cost of a new jet ( 090.5. ) Not allow Allow Years of service $1 , 100 $1 , 100 Replace at time* 5. Increased operating costs (0.00.5 ); \\Annual savings. (0.0.05 ): NIA NIA $100 all numbers are in ( 0.0 0, ) O 2 - Equipment 3 5 . Tox Book Value . 1 , 100 8:25 . \\55 3 274 Depreciation 275 . \\27:5 275 275 Operaity Could throw depreciation ( 275 ) _17151 ( 2 15 ) Managed tests. ( 25 ) \\125 )| \\( 25) Manual savings ( 25 ) 23. ) 10 01 10 d 10.# 10 0 10 0) EBIT 75 _- 780 - 70^ - 200 - 20 0 Operating (` flow \\75 SL 75 SL 75. lost of new not : EAC + LAC, EAS 1.13 4 _ CAC Jutt CEAC : On