Buying&Selling 1 OCT20.qxp_Finance 20/10/2020 10:20 Page 1
BUYING & SELLING AIRCRAFT
Buying Business Jets: How Net Present Value Helps What is the Net Present Value of owning and operating a business jet, and how can it highlight the differences between acquisition options? David Wyndham provides an outline‌ he economics of owning and operating aircraft are important criteria in the decision to buy, sell or upgrade. Last month we discussed the Life-Cycle Costing of aircraft ownership. That method accounts not only for the costs of operating the aircraft, but the cost to acquire it and the recognition of the aircraft’s residual value after the end of the ownership cycle. Table A (opposite) provides a general example
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54 Vol 24 Issue 11 2020 AVBUYER MAGAZINE
of the costs for the same aircraft over five years when purchased and when leased. (Be aware, however, that making the decision on either acquisition or operating costs will yield an incomplete answer, as we will explore below.) From the example in Table A, the acquisition cost exceeds the lease payments while operating costs are the same since they are for the same aircraft. The total life-cycle cost favors acquisition, primarily because of the resale value
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