A company is currently paying a sales representative $0.60 per mile to drive her car for company business. The company is considering supplying the representative with a car, which would involve the following: A car costs $25,000. has a service life of 5 years. and a market value of $5,000 at the end of that time. Monthly storage costs for the car are $200. and the cost of fuel, tires, and maintenance is 20 cents per mile. The car will be depreciated by MACRS, using a recovery period of 5 years (20%, 32%, 19.20%.11.52%, and 11.52%). The firm’s marginal tax rate is 40%.
• Suppose that the required travel by the sales person would be 30,000 miles per year. Which option would be better at i = 15%?
• What annual mileage must a salesman travel by car for the cost of the two methods of providing transportation to be equal if the interest rate is 15%? 

(a) Determine the annual net cash flows from the project.
(b) Perform a sensitivity analysis on the project’s data, varying savings in telephone bills and savings in deadhead mites. Assume that each of these variables can deviate from its base case expected value by ± 10%, ± 20%, and ± 30%.