A low- cost airline operating in South Africa is considering adding either Boeing 737- 400 or Boeing 737- 800 to its fleet. The following information is prepared for the economic evaluation. Either aircraft is to be used for 5 years and sold for the estimated salvage value. Assume the double declining balance is used for tax purposes in this country and the airline's before- tax MARR is 6.00% per year and the effective tax rate is 35%. Select a machine on the basis of after- tax present worth analysis. $$\begin{array} { | l | l | l | }
\hline \text { Alternative } & 737 - 400 & 737 - 800 \
\hline \text { First costs } & \$ 390,000 & \$ 475,000 \
\hline \text { Annual benefits } & \$ 330,000 & \$ 405,000 \
\hline \text { Salvage value } & \$ 234,000 & \$ 234,000 \
\hline \text { Life, years } & 8 & 10 \
\hline
\end{array}$$

Question

A low- cost airline operating in South Africa is considering adding either Boeing 737- 400 or Boeing 737- 800 to its fleet. The following information is prepared for the economic evaluation. Either aircraft is to be used for 5 years and sold for the estimated salvage value. Assume the double declining balance is used for tax purposes in this country and the airline's before- tax MARR is 6.00% per year and the effective tax rate is 35%. Select a machine on the basis of after- tax present worth analysis. $$\begin{array} { | l | l | l | } 
\hline \text { Alternative } & 737 - 400 & 737 - 800 \
\hline \text { First costs } & \$ 390,000 & \$ 475,000 \
\hline \text { Annual benefits } & \$ 330,000 & \$ 405,000 \
\hline \text { Salvage value } & \$ 234,000 & \$ 234,000 \
\hline \text { Life, years } & 8 & 10 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of A low- cost airline operating in South Africa is considering adding either Boeing 737- 400 or Boeing 737- 800 to its fleet. The following information is prepared for the economic evaluation. Either aircraft is to be used for 5 years and sold for the estimated salvage value. Assume the double declining balance is used for tax purposes in this country and the airline's before- tax MARR is 6.00% per year and the effective tax rate is 35%. Select a machine on the basis of after- tax present worth analysis. $$\begin{array} { | l | l | l | } 
\hline \text { Alternative } & 737 - 400 & 737 - 800 \
\hline \text { First costs } & \$ 390,000 & \$ 475,000 \
\hline \text { Annual benefits } & \$ 330,000 & \$ 405,000 \
\hline \text { Salvage value } & \$ 234,000 & \$ 234,000 \
\hline \text { Life, years } & 8 & 10 \
\hline
\end{array}$$

A Low- Cost Airline Operating in South Africa Is Considering