Cost Reimbursement (break-even) 13. It costs $3400 for a first-class roundtrip from Boston to London (6560 miles) and there are 3 trips per week. Assuming an MARR of 15% and the following data, how many passengers must fly per trip on average? Item Cost $12,000K 15 years $2000K $225K $0.67 $75 $250 $237K Initial Cost Service Life Salvage Value Annual Crew (labor) Fuel cost per mile Catering per person Fee per landing Maintenance per yr Insurance per yr $166K Example - Service Project 14. An old lighting system costs $20K per year to run. A consultant tells you the bill could be reduced to $11K per year if you buy a new system for $50K (20-year life). Neither system has a salvage value and the MARR is 12%.

FINANCIAL ACCOUNTING
10th Edition
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Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Please number 14

**Cost Reimbursement (break-even)**

13. It costs $3400 for a first-class roundtrip from Boston to London (6560 miles) and there are 3 trips per week. Assuming an MARR of 15% and the following data, how many passengers must fly per trip on average?

| Item                  | Cost      |
|-----------------------|-----------|
| Initial Cost          | $12,000K  |
| Service Life          | 15 years  |
| Salvage Value         | $2000K    |
| Annual Crew (labor)   | $225K     |
| Fuel cost per mile    | $0.67     |
| Catering per person   | $75       |
| Fee per landing       | $250      |
| Maintenance per yr    | $237K     |
| Insurance per yr      | $166K     |

---

**Example - Service Project**

14. An old lighting system costs $20K per year to run. A consultant tells you the bill could be reduced to $11K per year if you buy a new system for $50K (20-year life). Neither system has a salvage value and the MARR is 12%.
Transcribed Image Text:**Cost Reimbursement (break-even)** 13. It costs $3400 for a first-class roundtrip from Boston to London (6560 miles) and there are 3 trips per week. Assuming an MARR of 15% and the following data, how many passengers must fly per trip on average? | Item | Cost | |-----------------------|-----------| | Initial Cost | $12,000K | | Service Life | 15 years | | Salvage Value | $2000K | | Annual Crew (labor) | $225K | | Fuel cost per mile | $0.67 | | Catering per person | $75 | | Fee per landing | $250 | | Maintenance per yr | $237K | | Insurance per yr | $166K | --- **Example - Service Project** 14. An old lighting system costs $20K per year to run. A consultant tells you the bill could be reduced to $11K per year if you buy a new system for $50K (20-year life). Neither system has a salvage value and the MARR is 12%.
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