Assignment

New-model commercial airplanes are much more fuel-efficient than older models. How is it possible for airlines flying older models to make money when their competitors are flying newer planes? When answering this question, consider capital budgeting. If the old planes still make money, does it make sense to buy new planes, given how long it would take to make the money back from the purchase of new planes? Explain thoroughly.

Be sure to support your statements with logic and argument, citing any sources referenced. Post your initial response early, and check back often to continue the discussion. Be sure to respond to your peers and instructor's posts, as well.

Note: This discussion is not about airline usage or efficiency. It is about the different capital budgeting techniques that we learned about in week two and the airline is simply the context of the analysis. You can talk about cash flow, estimates of cash flow, certainty / risk of cash flow under different sates of nature and the way it used in Capital budgeting techniques.