The world airline system is composed of the routes X and Y, each of which requires aircraft. These routes can be serviced by three types of aircraft-A, B, and C. There 5 type A aircraft available, 10 type B, and 10 type C. These aircraft are identical for their operating costs, which are as follows: Annual Operating Cost ($ millions)
Aircraft Type Route X Route Y
A 1.5 1.5
B 2.5 2.0
C 4.5 3.5
The aircraft have a useful life of five years and a salvage value of $1 million. The aircraft owners do not operate the aircraft themselves but rent them to the operators. Owners act competitively to maximize their rental income, and operators attempt to minimize their operating costs. Airfares are also competitively determined. Assume the cost of capital is 10%.
a. Which aircraft would be used on which route, and how much would each aircraft be worth?
b. What would happen to usage and prices of each aircraft if the number of type aircraft increased to 10?
c. What would happen if the number of type A aircraft increased to 15?
d. What would happen if the number of type A aircraft increased to 20? State any additional assumptions you need to make.

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

Which of the following is an example of search costs? a.) driving to a faraway place to find available goods b.) buying goods in some special way that is outside the normal channels c.) paying a premium cost for goods d.) selling extra goods for a discount price

Money aggregates identify whether each of the following examples belongs in m1 or m2. if an example belongs in both, be sure to check both boxes. example m1 m2 gilberto has a roll of quarters that he just withdrew from the bank to do laundry. lorenzo has $25,000 in a money market account. neha has $8,000 in a two-year certificate of deposit (cd).