Washington Air Company is considering the purchase of a helicopter for connecting services between the company's base airport and the new inter-county airport being built about 30 miles away. It is believed that the chopper will be needed only for six years until the Rapid Transit Connection is phased in. The estimates on two types of helicopters under consideration, the Whirl 2B and the ROT 8, are given in Table P6.47. Assuming that the Whirl 2B will be available in the future with identical costs, what is the annual cost advantage of selecting the Whirl 2B? (Use an interest rate of 10%.)

Transcribed Image Text:

The Whirl 2B The ROT 8 First cost Annual maintenance Salvage value Useful life in years $95,000 $3.000 $12.000 $120,000 $9,000 $25,000