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This week I choose to answer question 1, Which company's estimate of useful life more closely reflects reality?Airline Y depreciates its airplanes over a 25-year
This week I choose to answer question 1, Which company's estimate of useful life more closely reflects reality?Airline Y depreciates its airplanes over a 25-year period, while Airline X uses a 15-year period. Given that many commercial airplanes actually stay in service for 25 to 30 years, Airline Y's estimate seems more realistic. With advances in aircraft technology and rigorous maintenance programs, planes are staying efficient and safe for longer periods. Plus, regulatory requirements and industry practices ensure that even older airplanes meet safety and environmental standards, extending their useful life even further.Sure, older airplanes might have higher maintenance costs, but modern maintenance practices can manage these costs effectively, making a 25-year period reasonable. Airline Y's higher salvage value also makes sense because there's still a strong demand for used aircraft in secondary markets, where they hold significant value. So, Airline Y's 25-year estimate aligns with how long planes are really being used and the economic realities of maintaining them. It seems like a more accurate reflection of what's actually happening in the industry.how do I respond to this post?
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