An airline is considering two types of engine systems for use in its planes. Each has the same life and the same maintenance and repair record. System A costs $120,000 and uses 39,000 gallons per 1,000 hours of operation at the average load encountered in passenger service. System B costs $320,000 and uses 27,000 gallons per 1,000 hours of operation at the same level. Both engine systems have three-year lives before any major overhaul is required. On the basis of the initial investment, the systems have 14% salvage values. If jet fuel costs $2.28 a gallon (year 1) and fuel consumption is expected to increase at the rate of 12% per year because of degrading engine efficiency, which engine system should the firm install? Assume 2,000 hours of operation per year and a MARR of 7%. Use the AE criterion. What is the equivalent operating cost per hour for each engine? Assume an end-of-year convention for the fuel cost. More Info 3 Click the icon to view the interest factors for discrete compounding when MARR = 7% per year. - x The equivalent annual costs for system Aa und to the nearest dollar.) Single Payment Compound Present Amount Worth Factor Factor (FIP, i, N) (P/F, I, N) 1.0700 0.9346 1.1449 0.8734 1.2250 0.8163 1.3108 0.7629 1.4026 0.7130 Compound Amount Factor (F/A, i, N) 1.0000 2.0700 3.2149 4.4399 5.7507 Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, I, N) (PIA, I, N) 1.0000 0.9346 0.4831 1.8080 0.3111 2.6243 0.2252 3.3872 0.1739 4.1002 Capital Recovery Factor (A/P, I, N) 1.0700 0.5531 0.3811 0.2952 0.2439 Do ovo u AWN-Z 1.5007 1.6058 1.7182 1.8385 1.9672 0.6663 0.6227 0.5820 0.5439 0.5083 7.1533 8.6540 10.2598 11.9780 13.8164 0.1398 0.1156 0.0975 0.0835 0.0724 4.7665 5.3893 5.9713 6.5152 7.0236 0.2098 0.1856 0.1675 0.1535 0.1424 An airline is considering two types of engine systems for use in its planes. Each has the same life and the same maintenance and repair record. System A costs $120,000 and uses 39,000 gallons per 1,000 hours of operation at the average load encountered in passenger service. System B costs $320,000 and uses 27,000 gallons per 1,000 hours of operation at the same level. Both engine systems have three-year lives before any major overhaul is required. On the basis of the initial investment, the systems have 14% salvage values. If jet fuel costs $2.28 a gallon (year 1) and fuel consumption is expected to increase at the rate of 12% per year because of degrading engine efficiency, which engine system should the firm install? Assume 2,000 hours of operation per year and a MARR of 7%. Use the AE criterion. What is the equivalent operating cost per hour for each engine? Assume an end-of-year convention for the fuel cost. More Info 3 Click the icon to view the interest factors for discrete compounding when MARR = 7% per year. - x The equivalent annual costs for system Aa und to the nearest dollar.) Single Payment Compound Present Amount Worth Factor Factor (FIP, i, N) (P/F, I, N) 1.0700 0.9346 1.1449 0.8734 1.2250 0.8163 1.3108 0.7629 1.4026 0.7130 Compound Amount Factor (F/A, i, N) 1.0000 2.0700 3.2149 4.4399 5.7507 Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, I, N) (PIA, I, N) 1.0000 0.9346 0.4831 1.8080 0.3111 2.6243 0.2252 3.3872 0.1739 4.1002 Capital Recovery Factor (A/P, I, N) 1.0700 0.5531 0.3811 0.2952 0.2439 Do ovo u AWN-Z 1.5007 1.6058 1.7182 1.8385 1.9672 0.6663 0.6227 0.5820 0.5439 0.5083 7.1533 8.6540 10.2598 11.9780 13.8164 0.1398 0.1156 0.0975 0.0835 0.0724 4.7665 5.3893 5.9713 6.5152 7.0236 0.2098 0.1856 0.1675 0.1535 0.1424