Question: Can someone please help me with this question. Question 3 The airline that you work for is considering flying a new route from Brisbane to

Can someone please help me with this question.

Can someone please help me with this question. Question 3 The airline

Question 3 The airline that you work for is considering flying a new route from Brisbane to Los Angeles. To do this the airline will need to buy a new aircraft that is capable of the longer distance. The plane will cost $50 million. Fuel and parking costs will be $5 million per year. In addition, you will have labour costs summing to $8 million annually. You estimate that the revenue per year will be $20 million. Your plane has a useful life of 10 years, will be depreciated to a value of $0 and will be sold for scrap for $1000000 after 10 years when you will cease flying the route. The cost of capital is 4%. The tax rate is 21%. A. Calculate the operating cash flows for the project. (10 Marks) B. Calculate the NPV of the project. Should you proceed with the project? (5 Marks) C. Calculate the payback period. If you wanted to be paid back after 4 years should you proceed? (5 Marks) Question 3 The airline that you work for is considering flying a new route from Brisbane to Los Angeles. To do this the airline will need to buy a new aircraft that is capable of the longer distance. The plane will cost $50 million. Fuel and parking costs will be $5 million per year. In addition, you will have labour costs summing to $8 million annually. You estimate that the revenue per year will be $20 million. Your plane has a useful life of 10 years, will be depreciated to a value of $0 and will be sold for scrap for $1000000 after 10 years when you will cease flying the route. The cost of capital is 4%. The tax rate is 21%. A. Calculate the operating cash flows for the project. (10 Marks) B. Calculate the NPV of the project. Should you proceed with the project? (5 Marks) C. Calculate the payback period. If you wanted to be paid back after 4 years should you proceed

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