A corporate jet costs $1,350,000 and will incur $200,000 per year in fixed costs (maintenance, licenses, insurance, and hangar rental) and $277 per hour in variable costs (fuel, pilot expense, etc.). The jet will be operated for 1,200 hours per year for five years and then sold for $650,000. The MARR is 15% per year. a) Determine the capital recovery cost of the jet. b) What is the EUAC of the jet?
A corporate jet costs $1,350,000 and will incur $200,000 per year in fixed costs (maintenance, licenses, insurance, and hangar rental) and $277 per hour in variable costs (fuel, pilot expense, etc.). The jet will be operated for 1,200 hours per year for five years and then sold for $650,000. The MARR is 15% per year. a) Determine the capital recovery cost of the jet. b) What is the EUAC of the jet?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A corporate jet costs $1,350,000 and will incur $200,000 per
year in fixed costs (maintenance, licenses, insurance, and
hangar rental) and $277 per hour in variable costs (fuel, pilot
expense, etc.). The jet will be operated for 1,200 hours per
year for five years and then sold for $650,000. The MARR is
15% per year.
a) Determine the capital recovery cost of the jet.
b) What is the EUAC of the jet?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad7e613a-702e-43f5-9afd-5748a48d44c0%2Faf174fda-134e-4b3b-84ed-5472288e08b0%2Fmcdtm8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A corporate jet costs $1,350,000 and will incur $200,000 per
year in fixed costs (maintenance, licenses, insurance, and
hangar rental) and $277 per hour in variable costs (fuel, pilot
expense, etc.). The jet will be operated for 1,200 hours per
year for five years and then sold for $650,000. The MARR is
15% per year.
a) Determine the capital recovery cost of the jet.
b) What is the EUAC of the jet?
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