ark or Probiem 10-2 Lon Timur is an accounting major at a midwestern state university located approadmately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information 1. Five used vans would cost a total of $74,300 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation 2. Ten drivers would have to be employed at a total payroll expense of $47,990, 3. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16,010, Maintenance $3,310, Repairs 14,010, Insurance $4,200, and Advertising $2,490. 4. Lon has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiate is 15%. Use this rate for cost of capital 5. Lon expects each van to make ten round trips weekly and carry an average of six students each trip. The service is expected to operate 30 weeks each year and each student will be charged $12.00 for a round-trip ticket. udy Click here to view.pitable (a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to o decimal places, 6.0.125) Net Income $ Net annual cash flows $ (b) vers to 2 decimal places, ed. 10.50.) Problem 16-2 Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major oty. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information 1. Five used vans would cost a total of $74,300 to purchase and would have a 5-year useful life with negligible salvage value. Lon plans to use straight-line depreciation 2. Ten drivers would have to be employed at a total payroll expense of $47,990. 3. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16.010, Maintenance $3,310, Repairs $1,010, Insurance $4,200, and Advertising $2,490. 4. Lon has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiate is 15%. Use this rate for cost of capital 5. Lon expects each van to make ten round trips weekly and carry an average of six students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $12.00 for a round-trip ticket. Click here to view puitable (a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to decimal places, eg. 125.) Net income 5 ENG 102 AM 8/2/2020 Net annual cash flows $ (a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to decimal places, eg, 125.) Net income $ Net annual cash flows $ (b) Compute (1) the cash payback period and (2) the annual rate of return (Round answers to 2 decimal places, e.g. 10,50.) Cash payback period years Annual rate of retum Compute the net present value of the commuter service. (Round answer to o decimal places, e.g. 125. If the net present value is negative use either a negative si preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Net present value Work for this question: Open Show Work 1:03 AM CALCULATOR FULL SCREEN FRIEVER AL Problem 16-2 Lon Timur is an accounting majorat a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes res on the weekends. ton, an entrepreneur heart, reales that few good commuting alternatives are available for dents doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall location. Lon has gathered the following investment information 1. Tive used as would cost a total of $4,500 to purchase and would have a 3-year life with negligible salvaje value. Lon plans to use straight line depreciation 2 Ten drivers would have to be mye at a total roll expense of 547,990 other are out of pocket expected with running the commervice would include Gasoline 516,010, Maintenance $3,310, Repairs 54,010, Insurance 54,200, and Advertising 12.49 4 Lon has visted several final institutions to do funding. The best test rate he has been able to negotiate 15. Use this rate for cost of capital Lan expects each van to make ten rond trips weekly and carry were of dents each trip. The service is expected to rate was each year, and each hudent will be charged $12.00 for around tro beet (a) Determine the annual (1) net income and c) ne nalows for the commuter service (ound answers to decimal 125) Net alcachows (1) Comote (1) the cash payback period and (2) the anal rate of retum. (Hound answers to decimal places. 10.50) Cash payback period Annual rate of rebum Compute the net present value of the commuter wervice und answer to decimal places. 125. If the nel present value theraegative in preceding the number -15 or parentheses (45). For action purposes, use s decimal places as displayed in the factor table provided) Net presente Click if you would like to show Work for the questions