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Washington Air Company is considering the purchase of a helicopter for connecting services between the company's base airport and the new intercounty airport being built
Washington Air Company is considering the purchase of a helicopter for connecting services between the company's base airport and the new intercounty airport being built about 30 miles away. It is believed that the chopper will be needed only for eight years until the Rapid Transit Connection is phased in. The estimates on two types of helicopters under consideration, the Whirl 2B and the ROT 8, are given in the table below. Assuming that the Whirl 2B will be available in the future with identical costs, what is the annual cost advantage of selecting the ROT 8? (Use an interest rate of 8%.) Single Payment Equal Payment Series Compound Present Compound Sinking Present Capital Amount Worth Amount Fund Worth Recovery Factor Factor Factor Factor Factor Factor The Whirl 2B The ROT 8 2 (F/P, i, N) (P/F, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) (A/P, i, N) First cost $100,000 $102,000 1.0800 0.9259 1.0000 1.0000 0.9259 1.0800 Annual $6,000 $7,500 1.1664 2.0800 1.7833 maintenance 0.8573 0.4808 0.5608 OI AWN - Salvage value $16,000 $26,000 1.2597 0.7938 3.2464 0.3080 2.5771 0.3880 Useful life in 1.3605 0.7350 4.5061 0.2219 3.3121 0.3019 8 years 1.4693 0.6806 5.8666 0. 1705 3.9927 0.2505 1.5869 0.6302 7.3359 0. 1363 4.6229 0.2163 1.7138 0.5835 8.9228 0.1121 5.2064 0.1921 10 00 ) 1.8509 0.5403 10.6366 0.0940 5.7466 0. 1740 1.9990 0.5002 12.4876 0.0801 6.2469 0. 1601 10 2. 1589 0.4632 14.4866 0.0690 6.7101 0. 1490 The annual cost advantage of selecting the ROT 8 is $ . (Round to the nearest dollar.)
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