A small regional airline has narrowed down the possible choices for its next passenger plane purchase to

Question:

A small regional airline has narrowed down the possible choices for its next passenger plane purchase to two alternatives. The Eagle model costs $600,000, and would have an estimated resale value of $100,000 after seven years. The Albatross model has a $750,000 price, and would have an estimated resale value of $300,000 after seven years. The annual operating profit from the Eagle would be $150,000. Because of its greater fuel efficiency and slightly larger seating capacity, the Albatross’s annual profit would be $190,000. Which plane should the airline purchase if its is 13%? In current dollars, what is the economic advantage of selecting the preferred alternative? Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...