University | National University of Singapore (NUS) |
Subject | FIN2004: Finance |
ASSIGNMENT
ABC Airlines is an airline company and XXLease Co is an aircraft leasing company operating under the following market conditions:
Aircraft sale price | $9.6 million per aircraft 15% volume discount for orders of >10 aircraft |
Aircraft useful life | 7 years |
Route operating revenue | $1.8 million per annum forecasted traffic growth of 10% year-on-year |
Route operating expenses | 20% of operating revenue |
Aircraft lease price | $1.45 million per annum |
Market interest rate | 5% |
In your paired groupings, take on the roles of the management for ABC Airlines and XXLease Co respectively. Conduct capital budget evaluations for ABC Airlines and XXLease Co in terms of aircraft asset management. Considering both quantitative and qualitative evaluations for both companies, present your recommendation(s) on asset management that will be optimal for the ecosystem.
Have to include: (Best to be presented with a table, figures, and charts)
- Payback Period
- NPV
- IRR
Notes
1. Adequately demonstrate:
- A good understanding of key financial concepts such as time value of money and how it impacts capital budgeting and asset management decisions;
- Proficiency in selecting relevant information and/or utilizing limited information available to conduct financial analysis;
- Competency in conducting capital budgeting evaluation analysis using one or more methodologies taught in class; and
- Presentation, analytical and organizational skills in understanding, evaluating, and providing recommendations comprehensively in a given business situation.
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