Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please hand in an Excel printout for this homework (Philly Air) PhillyAir Inc. offers low cost air travel between Philadelphia and Atlantic City. Philly Air's

Please hand in an Excel printout for this homework

(Philly Air) PhillyAir Inc. offers low cost air travel between Philadelphia and Atlantic City. Philly Air's invested capital is $5,000,000, corresponding to the investment in the two planes the company owns. Each of the two planes can carry 50 passengers. Each plane does 12 daily trips from Philadelphia to Atlantic City and 12 from Atlantic City to Phila-delphia. The price is $100 for each one-way ticket. The current load factor is 70 percent (ie., 35 seats are sold on the average flight). The annual cost of operating the service and

running the business is $60,000,000 (including all costs, such as labor, fuel, marketing, gate fees, landing fees, maintenance, etc). The company operates 365 days a year. ( a) Draw an ROIC (return on invested capital) tree for the company that incorporates all of the above information (b) What is the current ROIC? ( c )What is the minimum load factor at which the company breaks even? (d) What load factor would the company have to achieve so that it obtained a 10 percentage-

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Cost Management

Authors: Don R Hansen, Maryanne M Mowen, Dan L Heitger

5th Edition

357141091, 978-0357141090

More Books

Students also viewed these Accounting questions

Question

Subjective norms, i.e. the norms of the target group

Answered: 1 week ago