Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Eagle airlines owns and operates 3 small twin engine airplanes in a small community in eastern United States. It offers both scheduled and charter flights.

image text in transcribed

Eagle airlines owns and operates 3 small twin engine airplanes in a small community in eastern United States. It offers both scheduled and charter flights. It is considering expanding its fleet with a used Piper Seneca offered for $95K. Eagle Airlines believes it can successfully counter at $85K to $90K. An investment alternative to the fourth plane would be a fixed income instrument paying 8%. Projected financial impact of the new aircraft is calculated as follows: Tota!Revenue = Revenue Charters + Revenue Schedule Flights -(%charter" Hours"CharterPrice)+(1- %charter)* Hours *TicketPrice"Passengers"capacity FinanceCost-Price"%financed" Rate) TotalCost-Hours OperatingCost+Insurance+FinanceCost Profit TotalRevenue TotalCost Implement the spreadsheet below with the calculations above and run a one-way sensitivity analysis on profit using the limits in columns D and F. List the inputs from largest profit impact to smallest profit impact. Base Low High 2 Hours Flown 800 50% $100 $325 50% $245 $20,000 $87,500 11.5% 40% 500 40% $95 $300 45% $230 $18,000 $85,000 10.5% 30% 1000 60% $108 $350 70% $260 $25,000 $90,000 13.0% 50% 3 Capacity Ticket Price 5 Charter Price 6 Charter Proportion 7 Operating Cost 8 Insurance 9Aircraft Price 10 Interest Rate 11 Proportion Financed Proportion of Charter Flights Capacity Hours Flown Operating Cost Proportion Financed Charter Price Aircraft Price Interest Rate vInsurance Ticket Price

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions