The company “World Airline System” is composed of the routes X and Y, and each route

requires 10 aircrafts. These routes can be serviced by three types of aircrafts — A, B, and C.

There are (five) 5 type A aircraft available, 10 type B, and 10 type C. These aircrafts are identical

except for their operating costs, which are as follows:

Annual operating cost ($ millions)

Table (**************)

The aircrafts have a useful life of five years and a salvage value of $1 million.

The aircrafts owners do not operate the aircrafts themselves but rent them to the operators.

Owners act competitively to maximize their rental income, and operators attempt to minimize

their operating costs. Airfares are also competitively determined. Assume the cost of capital is

10%.

a. Which aircraft would be used on which route, and how much would each aircraft be

worth?

b. What would happen to usage and prices of each aircraft if the number of type A

aircrafts increased to 10. 15, or 20?

State any additional assumptions you need to make.

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2pages . must get citation from the book flow APA 7 format. get introduction and conclusion