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ABC Bus Service offers low-cost bus transportation between Al Ain and Abu Dhabi. The invested capital is AED 20 million, corresponding to the investment in
ABC Bus Service offers low-cost bus transportation between Al Ain and Abu Dhabi. The invested capital is AED 20 million, corresponding to the investment in the ten buses it owns. Each of the ten buses can carry 30 passengers. Each bus does 6 daily trips from Al Ain to Abu Dhabi and 6 from Abu Dhabi to Al Ain. The price is AED20 for each one-way ticket. The current load factor is 60 percent (i.e., 18 seats are sold on average). The annual cost of operating the service and running the business is AED 8 million. The company operates 300 days a year. a) Draw an ROIC (return on invested capital) tree for the company b) What is the current ROIC? c) What is the minimum load factor at which the company breaks even
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