Revisit the chapter opening story about LMC's consideration of purchasing a business airplane for domestic travels. Key financial data are as follows:• Cost of aircraft: $1,282,035• Market value of the aircraft after five years: $832,000• Total variable cost per hour: $272 first year and increases at 6% per yearthereafter• Total fixed operating cost per hour: $302.95 first year and increases at 4 % per year• Annual operating hours: 200 hours Compute the equivalent annual cost of owning and operating the aircraft per flying hour over five years at an annual interest rate of 12%.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Revisit the chapter opening story about LMC's consideration of purchasing a business airplane for domestic travels. Key financial data are as follows:
• Cost of aircraft: $1,282,035
• Market value of the aircraft after five years: $832,000
• Total variable cost per hour: $272 first year and increases at 6% per year
thereafter
• Total fixed operating cost per hour: $302.95 first year and increases at 4 % per year
• Annual operating hours: 200 hours Compute the equivalent annual cost of owning and operating the aircraft per flying hour over five years at an annual interest rate of 12%.

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