Question

You own a small fleet of commuter airplanes which fly from Atlanta to Birmingham, Alabama.

Each round trip costs you an average of $3000 for the 300 mile trip (there and back). These costs include the costs of the pilot, aviation fuel, maintenance of the aircraft, depreciation of the aircraft, interest on the loan for the aircraft, annual license and registration fees for the aircraft and annual fees for the use of airport gates.

A corporation has offered you $2,000 for the 300 mile trip. Should you accept their offer? Do you have enough information above to make this decision? Explain why or why not.

Answer 1