Thornton Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $13,770,000; it will enable the company to increase its annual cash inflow by $5,100,000 per year. The plane is expected to have a useful life of five years and no salvage value. The second plane costs $27,900,000; it will enable the company to increase annual cash flow by $9,300,000 per year. This plane has an eight-year useful life and a zero salvage value.

Required

Determine the payback period for each investment alternative and identify the alternative Thornton should accept if the decision is based on the payback approach. (Round your answers to 1 decimal place.)

Suppose that xtel currently is selling at $40 per share. you buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. the rate on the margin loan is 8%. a. what is the percentage increase in the net worth of your brokerage account if the price of xtel immediately changes to (a) $44; (b) $40; (c) $36? (leave no cells blank - be certain to enter "0" wherever required. negative values should be indicated by a minus sign. round your answers to 2 decimal places.) b. if the maintenance margin is 25%, how low can xtel’s price fall before you get a margin call? (round your answer to 2 decimal places.) c. how would your answer to requirement 2 would change if you had financed the initial purchase with only $10,000 of your own money? (round your answer to 2 decimal places.) d. what is the rate of return on your margined position (assuming again that you invest $15,000 of your own money) if xtel is selling after one year at (a) $44; (b) $40; (c) $36? (negative values should be indicated by a minus sign. round your answers to 2 decimal places.) e. continue to assume that a year has passed. how low can xtel’s price fall before you get a margin call? (round your answer to 2 decimal places.)