Question
The Tree Top Airline (TTA) is a small feeder-freight line started with very limited capital to serve the independent petroleum operators in the arid Southwest.
The Tree Top Airline (TTA) is a small feeder-freight line started with very limited capital to serve the independent petroleum operators in the arid Southwest. All of its planes are identical, although they are pointed different colors. TTA has been contracting its plane overhaul work to Alamo Airmotive for $55,000 per plane per year. TTA estimates that, by building a $300,000 maintenance facility with a life of 8 years and a residual (market) value of $85,000 at the end of its life, they could handle their own overhaul at the cost of only $35,000 per plane per year. What is the minimum number of planes that they must operate to make it economically feasible to build this facility? The MARR is 20 % per year. (Enter your answer as a number without the dollar $ sign.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started