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United Airlines plan to buy 34 airplanes for $120000000 Flight operations and ground

United Airlines plan to buy 34 airplanes for $120,000,000. Flight operations and ground costs are expected to be $7,000,000 per year and $4,000,000 per year respectively. United expects to sell 300,000 tickets and variable costs are expected to be 20 percent of revenue. With a 14 percent required rate of return, what minimum price per ticket are needed to justify the purchase of the airplanes? (Assume a 20- year life and no salvage value for the airplane at the end of 20 years)(Hint: Income = Rev. - Variable cost-Fixed Cost, find annual revenue).

Jan 31 2020 View more View Less

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