A company is considering whether it should improve its air fleet. Its current fleet is in good order and is considered to have a useful life of 2 years. In 2 years time it could replace the existing fleet with a number of Super Jets. The company expects there will be no further improvements in the Super Jets so that once it replaces its existing fleet with Super Jets it will continue to replace in this manner every 5 years.

The following information has been collected with respect to the Super Jets:

Detail	Amount (dollar amounts in millions)
Additional Outlay	$750
Additional annual net cash receipts after all cash expenses including tax.	$250
Additional Salvage Value	$200
Opportunity cost of Super Jets	12%
Company tax rate	30%

The marginal AE and NPV_0, of the Superjets are

1. 73.42 and 487.78
2. 73.42 and 611.87
3. How long is a piece of string?
4. 42
5. 0 given overcapacity in the Australian domestic airline market