ALL Questions are mandatory and MUST be done

Taxi Co possesses and runs 350 taxicabs and had deals of $10 million somewhat recently. Taxi Co is thinking about presenting anew automated taxi global positioning framework.

The normal expenses and advantages of the new modernized global positioning framework are as per the following:

(I) The framework would cost $2,100,000 to carry out.

(ii) Depreciation would be given at $420,000 per annum.

(iii) $75,000 has effectively been spent on staff preparing to assess the capability of the new framework. Further

preparing expenses of $425,000 would be needed in the main year if the new framework is executed.

(iv) Sales are required to ascend to $11 million in Year 1 if the new framework is executed, from there on expanding by

5% per annum. On the off chance that the new framework isn't executed, deals would be required to increment by $200,000 per

annum.

(v) Despite expanded deals, investment funds in vehicle running expenses are normal because of the new framework. These are

assessed at 1% of absolute deals.

(vi) Six new individuals from staff would be enrolled to deal with the new framework at an absolute expense of $120,000 per annum.

(vii) Cab Co would need to take out an upkeep contract for the new framework at an expense of $75,000 per annum

for a very long time.

(viii) Interest on cash acquired to fund the venture would cost $150,000 per annum.

(ix) Cab Co's expense of capital is 10% per annum.

Required:

(a) State whether every one of the accompanying things are applicable or insignificant sources of income for a net present worth (NPV)

assessment of whether to present the modernized global positioning framework.

(I) Computerized global positioning framework venture of $2,100,000;

(ii) Depreciation of $420,000 in every one of the five years;

(iii) Staff preparing expenses of $425,000;

(iv) New staff complete compensation of $120,000 per annum;

(v) Staff preparing expenses of $75,000;

(vi) Interest cost of $150,000 per annum.

Note: The accompanying imprint designation is given as direction to this necessity:

(I) 05 imprints

(ii) 1 imprint

(iii) 05 imprints

(iv) 1 imprint

(v) 1 imprint

(vi) 1 imprint

(5 imprints)

(b) Calculate the accompanying qualities if the mechanized global positioning framework is carried out.

(I) Incremental deals in Year 1;

(ii) Savings in vehicle running expenses in Year 1;

(iii) Present estimation of the support costs over the existence of the agreement.

Note: The accompanying imprint allotment is given as direction to this necessity:

(I) 1 imprint

(ii) 05 imprints

(iii) 15 imprints

(c) Cab Co wishes to boost the abundance of its investors. It has accurately determined the accompanying measures for

the proposed electronic global positioning framework project:

- The inside pace of return (IRR) is 14%,

- The profit from normal capital utilized (ROCE) is 20% and

- The restitution period is four years.

Required:

Which of coming up next is valid?

A The undertaking is beneficial on the grounds that the IRR is a positive worth

B The undertaking is advantageous in light of the fact that the IRR is more prominent than the expense of capital

C The undertaking isn't beneficial in light of the fact that the IRR is not exactly the ROCE

D The undertaking isn't beneficial in light of the fact that the restitution is under five years