With a 14% required rate of return, what annual revenue is needed to justify the purchase. Assuming investors are fully informed, what will be the price of the stocks 1 year from now and what rate of return will stock holders earn over the year with and without the new investment? What is the value of asset? What happens if asst C is bought for less than its value.
1) A company plans to buy 34 jets for 120,000,000. Flight operations cost 7000000 and ground costs are 4000000 per year. The company expects to sell 300000 tickets and variable costs are expected to be 20% of revenue. With a 14% required rate of return, what annual revenue is needed to justify the purchase. Assumption is 20 year