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
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![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
First Cost
Annual Maintenance
Salvage Value
Useful life in years
$95,000
$3,000
$12,000
The ROT 8
$120,000
$9,000
$25,000
6
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 %)
A. cost more than $4,000
C. cost between $4,000 and $3,000
B. save between $3,000 and $2000
D. save more than $4,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf06dfce-943a-443a-85fc-bf79ef7bd7be%2Fe276cf77-6642-43e6-b9ee-db3fe73a4bdc%2Fp6054bc_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
First Cost
Annual Maintenance
Salvage Value
Useful life in years
$95,000
$3,000
$12,000
The ROT 8
$120,000
$9,000
$25,000
6
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 %)
A. cost more than $4,000
C. cost between $4,000 and $3,000
B. save between $3,000 and $2000
D. save more than $4,000
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