Question: Rini Airlines is considering two aiternative planes. Plane A has an expected life of 5 years, has an after tax cost of $85 million, and
Rini Airlines is considering two aiternative planes. Plane A has an expected life of 5 years, has an after tax cost of $85 million, and will produce after-tax cash flows of 535 million per year. Piane B has a life of 10 years, has an after-tax cost of $114 million, and will produce after-tax cash flows of $30 million per year, Rini plins to serve the route for 10 years. The campany's WACC is 14%. If Rini needs to purchase a new Plane A, the after-tax cost will be $100 milion, but cash inflows will remain the same. Should Aini acquire Plane A or Piane B? Explain your answer. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your ansuer to two decimal pleces. plane. is the better project and will increase the company's value by $ millions
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