A new design of aircraft saves annually fuel consumption of 45,000 gallons of fuel costing $6 per gallon. The new design costs $1 million to accomplish. The airline company’s MARR is 10%. Considering only the fuel savings. What is the simple payback period for the new design? What is the discounted payback period?

A new design of aircraft saves annually fuel consumption of 45,000 gallons of fuel costing $6 per gallon. The new design costs $1 million to accomplish. The airline company’s MARR is 10%. Considering only the fuel savings. What is the simple payback period for the new design? What is the discounted payback period?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

See similar textbooks

Similar questions

A restaurant sells pizza at a rate of $14.69/slice. Expenses for the restaurant include raw material for pizza at $9.69 per slice, $157.00 as monthly rental and $59.00 monthly as insurance. How many slices should the restaurant sell in a month to break even?
A company in Denver started a new production line to manufacture a new part. The table below showed the costs. If the parts will be sold at the selling price = $15.00/unit, what annual production quantity need to be manufactured to make it breakeven? Material and Parts Cost $3.00/unit, Labor Costs $4.00/unit, Overhead Cost $2,500,000, Annual Production Quantity ? units
Your Subaru Outback broke down. It has 110,000 miles and is paid off. You take it to the dealership for service and they tell you the head gasket is blown, you need new rotors, and brakes. This will cost you around $5,000. If you believe that you can get another 10 years with your old car, is it financially worth it to repair your current car or should you buy a new one?
Car A initially costs 500 more than car B. but it consumes 0.04 gallon/mile versus 0.05 gallon/mile for B. Both vehicles last 8 years, and B's Salvage value S 100 smaller than A's. Fuel costs S 1.7 per gallon. Other things being equal. beyond how many miles of use per year does car A become preferable to car B
Solve. Show complete solution.
Chevy sells the Corvette for $60k - $80k, yet some research unveils that it costs little over $25k to produce. If the BEP for the Corvette is so low, why then does Chevy price this sports car so high?
An automobile spare part is sold for $15 per unit. The VC are $3 per unit, 15000 units of the product are sold annually and a profit of $80,000 is made. The change to be made in the design of the product will increase the VC by 20% and the FC by 10%, and the sales amount will increase to 18000 units. a) At what selling price do we break even? b) What is the annual profit when the selling price remains the same ($12/unit)?
The Rosebud Motel is a must-stay for any road-tripper or weary traveler. The motel fils each of its 24 rooms for 200 nights each during the year. Annual fixed costs total $160,000. The variable cost of one night's stay is $100. The motel owners expect a 50% return on the company's $500,000 of assets each year. The Rosebud Motel is currently the only place to stay for 50 miles. What should Rosebud's cost-plus price be if sales volume and costs are expected to stay consistent? OA. $133.33 OB. $185.42 OC. $2,150.00 OD. $152.08 OE. The Rosebud Motel would not set its price as it is a price-taker in this market.
You are weighing the economics of installing a triple-glazed energy efficient window system in your building. The following life cycle costs and savings are provided. The study period is 25 years, and the discount rate is 10%. Is this an economically viable approach based on the Savings-to-Investment Ratio (SIR)? Triple- Glazed Energy Efficient Windows: Window Quantity takeoff: 10000 sf Initial Cost: $100/sf Annual Operating Costs: $2.5/sf Annual Energy Saving: $10/sf
Average and marginal products AP, MP 2,700 2,025 1,925 1,800 Average Product 825 Marginal Product 300 450 500 Quantity of labor Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above. The price of labor is $1,000 per unit (i.e., w= $1,000). The average variable cost when 500 units of labor are employed is $ of labor are employed is $. and the marginal cost when 500 units
Question 4 XYZ Company manufactures and sells plates. Present sales output is 4,000,000 units per year at a selling price of $.70 per unit. Fixed costs are $800,000 per year. Variable costs are $.35 per unit. What is the Contribution Margin for a year? $1,400,000 $800,0000 1,600,000 $400,000
Show complete solution Your uncle has almost convinced you to invest in his peach farm. It would require a $10,000 initial investment on your part. He promises you revenue (before expenses) of $1,800 per year, and increasing by $100 per year thereafter. Your share of the estimated annual expenses is $500. You are planning to invest for 6 years. Your uncle has promised to buy out your share of the business at that time for $12.000. You have decided to set a personal MARR of 15% per year. Use the PW, FW and AW method to determine the profitability of this investment project.