Question
ACME company is considering supplying employees with company cars. Employee travel is expected to be 30,000 miles per year. Supplying employees with company cars would
ACME company is considering supplying employees with company cars. Employee travel is expected to be 30,000 miles per year. Supplying employees with company cars would involve the following cost components: Car purchase: $28,000 with an estimated 3-year life Salvage value: $5000 Insurance cost: $1100/year Operating and maintenance expenses: $0.25 per mile MARR is 10%. The ACME company currently has 28 employees that travel frequently and the company pays employees $0.40 per mile to drive their own cars when on company business. a. What is the cost per mile of providing company cars to employees?
b. Should the company provide company cars? Why or why not?
Need: setup, calculations, statement (part b)
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