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A corporate jet costs $1,350,000 and will incur $200,000 per year in fixed costs (maintenance, licenses, insurance, and hangar rental) and $277 per hour in variable costs (fuel, pilot expense, etc.). The jet will be operated for 1,200 hours per year for five years and then sold for $589,193. The MARR is 15% per year.

Determine the capital recovery cost of the jet. I need help with expanding the CR equation. In condensed form it should be $1,350,000(A/P, 15%, 5) - $589,193(A/P, 15%, 5)

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91228453

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