6. (40 points) Suppose the Navy is considering three alternatives to replace an aging fleet of executive transport aircraft. The three alternatives are (a) Buy 10 Puddle Jumpers; (b) Buy 10 Mud Skippers; (c) Lease 10 Criss Crossers, and a fourth option (d) maintain the status quo of an existing fleet of 10 Maxi-Fliers. The comparison should extend through FY32. The alternatives and the status quo are outlined below: a. Status quo (Maxi-Flier): Ten aging Maxi-Fliers. The Maxi-Fliers can carry 16 passengers, have a range of 2800 nautical miles, achieve a fuel economy of 525 lbs per hour, and have a cruising speed of 325 knots. Beginning in FY22, the annual O&S cost to maintain the ten aircraft will be $0.4M per year per aircraft. It is expected that due to further aging and degradation, this O&S cost will increase by $0.2M per aircraft every year. If one of the alternative options is chosen, then the ten Maxi-Fliers will be sold on the foreign market for $8M (FY22) per aircraft at the first available opportunity. b. Buy Option 1 (Puddle Jumpers): The first purchase alternative is to acquire ten new Puddle Jumpers. The Puddle Jumpers can carry 15 passengers, have a range of 2500 nautical miles, achieve a fuel economy of 425 lbs per hour, and have a cruising speed of 375 knots. The annual O&S cost is expected to be $1.0M per year per aircraft, increasing to $1.2M per year after five years of operation. These aircraft will be purchased immediately beginning in FY22 at a cost of $7.5M each, half of which must be paid at the beginning of FY22, and the remaining half of which must be paid at the beginning of FY27 c. Buy Option 2 (Mud Skippers): Another purchase alternative is to acquire ten new Mud Skippers. The Mud Skippers can carry 20 passengers, have a range of 3000 nautical miles, achieve a fuel economy of 550 lbs per hour, and have a cruising speed of 360 knots. The annual O&S cost is expected to be $0.8M per year per aircraft, increasing by 10% per year after three years of operation. If this alternative is chosen, it will require one year to modify the hangar at a cost of $7.5M. The hangar modification will occur in FY22, and the Page 6 of 7 ten new aircraft will then be procured and paid for at the beginning of FY22 for $3.25M each but will not be delivered until the beginning of FY23. Meanwhile, the Navy will continue to use the Maxi-Fliers through FY22. d. Lease Option (Criss Crossers): The leasing alternative is to lease ten Criss Crossers. The Criss Crossers can carry 15 passengers, have a range of 2750 nautical miles, achieve a fuel economy of 400 lbs per hour, and have a cruising speed of 300 knots. The leasing cost is $1.5M per year per aircraft and includes annual operations and maintenance. These aircraft will be leased immediately beginning in FY22. The base commander has asked for an economic analysis of these four alternatives. The four key attributes are relative efficiency and effectiveness regarding (1) number of passengers that can be carried (min 6); (2) cruising range (min 2500); (3) fuel economy; and (4) cruising speed min (325). Furthermore, the base commander has established importance weights for these four attributes for use in the economic analysis. These metrics are displayed in the table below: Attribute Fuel Economy (lbs/hour) Range (NM) Passengers Cruising Speed (kts) CDRs Weight Status Quo 0,3 0.2 0.35 0.15 Puddle Jumper Mud Skipper Criss Crosser 525 450 550 400 2800 2500 3000 2750 16 15 20 15 325 375 360 300 Perform an economic analysis of these four alternatives, given the information provided. Use the Discount Rates at -0.005. Don't forget to make a recommendation 6. (40 points) Suppose the Navy is considering three alternatives to replace an aging fleet of executive transport aircraft. The three alternatives are (a) Buy 10 Puddle Jumpers; (b) Buy 10 Mud Skippers; (c) Lease 10 Criss Crossers, and a fourth option (d) maintain the status quo of an existing fleet of 10 Maxi-Fliers. The comparison should extend through FY32. The alternatives and the status quo are outlined below: a. Status quo (Maxi-Flier): Ten aging Maxi-Fliers. The Maxi-Fliers can carry 16 passengers, have a range of 2800 nautical miles, achieve a fuel economy of 525 lbs per hour, and have a cruising speed of 325 knots. Beginning in FY22, the annual O&S cost to maintain the ten aircraft will be $0.4M per year per aircraft. It is expected that due to further aging and degradation, this O&S cost will increase by $0.2M per aircraft every year. If one of the alternative options is chosen, then the ten Maxi-Fliers will be sold on the foreign market for $8M (FY22) per aircraft at the first available opportunity. b. Buy Option 1 (Puddle Jumpers): The first purchase alternative is to acquire ten new Puddle Jumpers. The Puddle Jumpers can carry 15 passengers, have a range of 2500 nautical miles, achieve a fuel economy of 425 lbs per hour, and have a cruising speed of 375 knots. The annual O&S cost is expected to be $1.0M per year per aircraft, increasing to $1.2M per year after five years of operation. These aircraft will be purchased immediately beginning in FY22 at a cost of $7.5M each, half of which must be paid at the beginning of FY22, and the remaining half of which must be paid at the beginning of FY27 c. Buy Option 2 (Mud Skippers): Another purchase alternative is to acquire ten new Mud Skippers. The Mud Skippers can carry 20 passengers, have a range of 3000 nautical miles, achieve a fuel economy of 550 lbs per hour, and have a cruising speed of 360 knots. The annual O&S cost is expected to be $0.8M per year per aircraft, increasing by 10% per year after three years of operation. If this alternative is chosen, it will require one year to modify the hangar at a cost of $7.5M. The hangar modification will occur in FY22, and the Page 6 of 7 ten new aircraft will then be procured and paid for at the beginning of FY22 for $3.25M each but will not be delivered until the beginning of FY23. Meanwhile, the Navy will continue to use the Maxi-Fliers through FY22. d. Lease Option (Criss Crossers): The leasing alternative is to lease ten Criss Crossers. The Criss Crossers can carry 15 passengers, have a range of 2750 nautical miles, achieve a fuel economy of 400 lbs per hour, and have a cruising speed of 300 knots. The leasing cost is $1.5M per year per aircraft and includes annual operations and maintenance. These aircraft will be leased immediately beginning in FY22. The base commander has asked for an economic analysis of these four alternatives. The four key attributes are relative efficiency and effectiveness regarding (1) number of passengers that can be carried (min 6); (2) cruising range (min 2500); (3) fuel economy; and (4) cruising speed min (325). Furthermore, the base commander has established importance weights for these four attributes for use in the economic analysis. These metrics are displayed in the table below: Attribute Fuel Economy (lbs/hour) Range (NM) Passengers Cruising Speed (kts) CDRs Weight Status Quo 0,3 0.2 0.35 0.15 Puddle Jumper Mud Skipper Criss Crosser 525 450 550 400 2800 2500 3000 2750 16 15 20 15 325 375 360 300 Perform an economic analysis of these four alternatives, given the information provided. Use the Discount Rates at -0.005. Don't forget to make a recommendation