9 The upturned wingtips on jet aircraft reduce drag and increase lift. Wingtips save onfuel consumption, averaging 4% of the total fuel bill. A single set of wingtips canannually save 45,000 gallons of jet fuel costing $3 per gallon. (Fuel is the biggestoperating expense of an airline company.) Furthermore, 100 metric tons of carbondioxide emissions each year will be avoided, and maintenance expenses will bereduced. Wingtips cost $1 million to install. The airline company's MARR is 20%.Considering only the fuel savings;a. What is the simple payback period for the wingtips?b. What is the discounted payback period?

The payback period refers to the time consumed to recover the cost which is incurred on investment…

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What is the simple payback period for the wingtips? What is the discounted payback period?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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