, from Tulsa to Denver. The plane will complete one round-trip set of flights each day, except for FAA required maintenance days. The FAA requires 15 maintenance days in 2019. 15 The seating capacity of the plane is 150 passengers. 150 The flights are expected to be sold out every day (occupancy rate). 100% The average revenue from a ticket the one-way flight will be set in advance. $235.00 Annual operating costs of the plane: Fuel $1,750,000 Flight personnel $750,000 Food and beverages $100,000 Maintenance $550,000 Other $100,000 Total $3,250,000 The cost of the plane $120,000,000 The expected service life of the plane in years 20 The required rate of return on the investment 12% Net present value factor, based on life and rate above 7.4694436 Calculate the NPV of the plane No of days in a year Maintenance days Operation days each year Days of operation each year One-way Revenue Rounds Seating Capacity Revenue Per day Revenue per day Revenue Per day No of days except maintenance Annual Revenue Annual revenue Revenue Operating costs Annual Cash flow Annual cash flow Present value Initial outlay NPV NPV Should the Aircraft be purchased? Change the occupancy rate to 80% Seating Capacity Revenue Operating costs Revised Cash flow Revised cash flow Present value Initial outlay NPV NPV Should the Aircraft be purchased? Calculate the occupancy rate that will make the NPV zero Initial Outlay Present value Cash flow Cash flow Cash flow Operating costs Annual Revenue Annual Revenue Annual revenue No of days in a year except maintenance Daily Revenue Daily Revenue Daily Revenue Two-way Revenue Seats to be sold Seats to be sold No of seats sold Seating capacity Seating rate needed Seating rate needed How would the occupancy percentage change, if you increase the seat price by 10% Two-way Revenue Total percentage increased in price Round-Trip average price Round-Trip average price Daily Revenue Round-Trip average price Seats to be sold Seats to be sold Seating capacitySeats to be sold Seating rate Seating rate