Aircraft A value-6.68-3.79=2.89 Aircraft B-1 (Due to 5 scrap) Aircraft C-1(Due to 5 scrap) On the other hand, one can also pick 10 Aircraft A both for Route X and Y Thus, Aircraft A=2.89
Question A. PVIFA=(1-(1+0.1)^5/0.1 =3.7908 PV=Annual Operation Cost*PVIFA Cost of Capital=10 percent Aircraft A =5.6862(1.5*3.7908)…