Consider an airline that is evaluating the provision of a live television service on its aircraft for a nominal fee of $8 per flight. Assume that the cost of installing the system is $2.5 million per aircraft, with a variable cost of $2 associated with licensing use of the system.

a. What is the accounting breakeven for the airline to install the system on a single aircraft?

b. What is the economic breakeven, assuming that the airline could install an inflight Internet service, in lieu of live television, which is expected to generate a positive cash flow of $500,000 annually?