The aircrafts have a useful life of five years and a salvage value of $1 million. The aircrafts owners do not operate the aircrafts 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%. Which aircraft would be used on which route, and how much would each aircraft be worth? What would happen to usage and prices of each aircraft if the number of type A aircrafts increased to 10, 15, or 20? State any additional assumptions you need to make. Please explain your answer in detail and provide in-text citations.
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The aircrafts have a useful life of five years and a salvage value of $1 million. The aircrafts owne...
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