What is the npv of plane b on a ten-year equivalent life


Shao Airlines is considering the purchase of two alternative planes. Plane A has an expected life of 5 years, will cost $120 million, and will produce net cash flows of $35 million per year. Plane B has a life of 10 years, will cost $145 million, and will produce net cash flows of $28 million per year. Shao plans to serve the route for only 10 years. Inflation in operating costs, airplane costs, and fares is expected to be zero, and the company's cost of capital is 10%. What is the NPV of plane B on a ten-year equivalent life basis? $27,047,879 $8,143,286 $9,255,576 $21,595,356 $12,677,537

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