Company X is considering the purchase of a helicopter for connecting services between their baseairport and the new inter-county airport being built about 30 miles away. It is believed that the chopperwill be needed only for 6 years until the Rapid Transit Connection is phased in. The estimates on twotypes of helicopters under consideration, The Whirl 2 B and The ROT 8, are given below:The Whirl 2 BFirst CostAnnual MaintenanceSalvage ValueUseful life in years$95,000$3,000$12,000The ROT 8$120,000$9,000$25,00063Assuming that the Whirl 2B will be available in the future with identical costs, what is the annual costadvantage of selecting The Whirl 2B ? (Use an interest rate of 10 %)A. cost more than $4,000C. cost between $4,000 and $3,000B. save between $3,000 and $2000D. save more than $4,000

Equivalent annual cost (EAC) is the yearly cost of owning, operating and maintaining an asset over…

Company X is considering the purchase of a helicopter for connecting services between their base airport and the new inter-county airport being built about 30 miles away. It is believed that the chopper will be needed only for 6 years until the Rapid Transit Connection is phased in. The estimates on two types of helicopters under consideration, The Whirl 2 B and The ROT 8, are given below. The Whirl 2 B $95,000 $3,000 $12,000 The ROT 8 $120,000 $9,000 $25,000 6 First Cost Annual Maintenance Salvage Value Useful life in years 3 Assuming that the Whirl 2B will be available in the future with identical costs, what is the annual cost advantage of selecting The Whirl 2B ? (Use an interest rate of 10 %) C. cost between $4,000 and $3,000 A. cost more than $4,000 B. save between $3.000 and $2000 D. save more than $4.000

Company X is considering the purchase of a helicopter for connecting services between their base airport and the new inter-county airport being built about 30 miles away. It is believed that the chopper will be needed only for 6 years until the Rapid Transit Connection is phased in. The estimates on two types of helicopters under consideration, The Whirl 2 B and The ROT 8, are given below. The Whirl 2 B $95,000 $3,000 $12,000 The ROT 8 $120,000 $9,000 $25,000 6 First Cost Annual Maintenance Salvage Value Useful life in years 3 Assuming that the Whirl 2B will be available in the future with identical costs, what is the annual cost advantage of selecting The Whirl 2B ? (Use an interest rate of 10 %) C. cost between $4,000 and $3,000 A. cost more than $4,000 B. save between $3.000 and $2000 D. save more than $4.000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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