(Philly Air) PhillyAir Inc. offers low cost air travel between Philadelphia and Atlantic City…. 1 answer below »


(Philly Air) PhillyAir Inc. offers low absorb air wandering between Philadelphia and Atlantic City. Philly Air’s invested important is $5,000,000, selfsame to the bombardment in the two rolls the order owns. Each of the two rolls can convey 50 passengers. Each roll does 12 daily trips from Philadelphia to Atlantic City and 12 from Atlantic City to Philadelphia. The figure is $100 for each one-way ticket. The ordinary commit element is 70 percent (i.e., 35 seats are sold on the middle exodus). The annual absorb of bountiful the utility and popular the profession is $60,000,000 (including all absorbs, such as drudge, fuel, marketing, gate fees, landing fees, means-of-support, etc.). The order operates 365 days a year.

a. Draw an ROIC (repay on invested important) tree for the order that incorporates all of the over notice. [6.2]

b. What is the ordinary ROIC? [6.2]

c. What is the insufficiency commit element at which the order breaks uniform? [6.3]

d. What commit element would the order enjoy to finish so that it obtained a 10 percentage-point growth in the ROIC (e.g., an ROIC increasing from 5 percent to 15 percent)? [6.3]