The Wasala Corporation leases an airplane on January 1, Year One for eight years for payments of $20,000 per year beginning immediately. The plane has an expected life of 10 years. The prime rate of interest is 6 percent but Wasala has an incremental borrowing rate of 8 percent. The present value of an ordinary annuity of $1 at 6 percent for 8 years is 6.22 and the present value of an ordinary annuity of $1 at 8 percent for 8 years is 5.75. The present value of an annuity due of $1 at 6 percent for 8 years is 6.58 and the present value of an annuity due of $1 at 8 percent for 8 years is 6.19.
What is the break-even point in number of passenger train cars per month? 1 car loaded by 70%, and there are 90 seats. Per month, the break-even for passengers is 35000. .7 * 90= 63 passengers, 35000/63 Break-even for number of cars 555.5555556: 556 c. If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars?
Delta Airline’s Cost of Capital A Case Study Part I: Compute Cost of Debt/Cost of Equity/ WACC • The beta of the stock is 0.90, based upon a regression of Delta stock returns against the S&P 500 Index. • The share price is $27.70, and there are 850,902,527 shares outstanding. Delta’s market cap is 23.57 billion. • The firm has $11,082 million in long-term debt on its balance sheet. Delta incurs a marginal corporate tax rate of 30%.
Before becoming captains, pilots must earn sufficient fly hours. However, flying schools do not have enough instructors to train enough new pilots. In response, the airline industries face increase labor costs as they raise pilot salaries in order to attract pilots. (3) Post 9/11 Aviation Security: after the 9/11 terrorist attacks, Congress passed the Aviation and Transportation Security Act (PDF), which created the Transportation Security Administration (TSA) and mandated that federal employees be in charge of airport security screening Jet Blue was a discount airline carrier. It offered passenger law fares; operated point to point system.
The investment for a new plant is 70 million dollars. If an entrant company has about 10% of the share (compared to the incumbent share of 35%) the profit for the company will be about 2 M. Ignoring the discount rate, it will take about 35 years to recover the cost of the new plant. This shows that the industry is capital intensive and it will be not an easy decision for a company to enter this industry. Additionally the plants are a scale intensive investment. For a 250 million sq ft plant the rate per square feet comes to 0.25 whereas for an 80 million sq ft facility this rate is 0.43.
How are your suggestion linked to improve customer satisfaction? In business literature, Delta had a primary capability on human relations by paying competitive wages, treating personnel equitably as it grew, and adopting a “no-layoff policy”. Things changed in the 1990’s for Delta though. Key business trends altered the competitive advantage, and the human resource strategy had to change too. After two straight years of financial losses in 1994, CEO Ron Allen rolled out a new strategy called “Leadership 7.5.” Allen targeted to reduce Delta’s cost per each available seat mile from more than 10 cents to 7.5 cents, which would match that of major competitor Southwest Airlines (Bryant, 1997).
It has also deferred the delivery of the last eight A380 super jumbos it has on order, as well as the last three of 14 new 787 Dreamliners due for Jetstar. It will also shelve growth plans for Singaporean budget offshoot Jetstar Asia amid intense competition with other budget airlines in the region. Qantas shares fell sharply Thursday, down about 6.5 per cent at $1.1875. Qantas declared a statutory loss of $235 million for the six months to December, compared with a $109 million profit in the same period a year earlier. Revenue fell 4 per cent to $7.9 billion.
"First we'll develop the technology," said Smitherman. "In 50 years or so, we'll be there. Then, if the need is there, we'll be able to do this. That's the gist of the report. Using today's energy costs, researchers figured a 12,000-kg Space Shuttle payload would cost no more than $17,700 for an elevator trip to GEO.
Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide. The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government's support to enrich shareholders and executives by backing millions of shoddy loans. Taxpayers so far have spent more than $135 billion on the cleanup. The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans.
Obama is seeking a $476-billion, six-year transportation bill, which, when added to another $50 billion requested for roads and bridges, amounts to an 80% increase over the last such request. Several Republicans noted the president's budget did not make structural changes to Medicare, a major driver of the nation's mounting debt but a political risk for both parties. Ryan has promised to include a Medicare overhaul in the House budget for a second year, although he is expected to give a modified version of the voucher-style program he proposed last year. But top advisors to Obama say his budget proposed more trims to entitlements, including Medicare and agricultural subsidies, than that of any recent president. The budget calls for $360 billion in cuts to Medicare and Medicaid over the next 10 years.