Assume that you are a Controller at Ontario Northland $($ONT$),$ one of regional railroads in

Canada. ONT is acquiring $200$ railroad tank cars to transport crude oil from northern Canada to the US$.$

You are transporting the oil for Numac Energy, ONT$$s sole customer for the tank cars. Your current $8-$year

transport contract stipulates the following, among other things: $(1)$ if the tank cars are transported halffull $($at $50\%$ of capacity$),$ the rate that Numac pays is $$900$ per day per car; $(2)$ if they are transported

three$-$fourths $(75\%)$ full, the rate is $ $1,050$ per day per car, and if they are full $(100\%),$ the rate will be

$$1,300$ per day. You estimate that the tank cars will operate half$-$full $20\%$ of the time, three$-$fourths full

$30\%$ of the time, and totally full $50\%$ of the time. Total expenses amount to $$28,000$ per day $($all cars

combined$)$ when the cars are in use, $330$ days per year. When they are not in used, the tank cars will cost

$$10,000$ per day to $$run$.$ These costs include depreciation, assuming an $8-$year life span of a tank car.

After the first $4$ years, you will incur retrofit costs of $$35,000$ per tank car. While the retrofit does not

prolong the life of a tank car, federal regulations require a retrofit to continue to operate the car after the

initial four$-$year period. If the retrofit is not completed, you can sell the tank cars for $$42,000($per tank

car$)$ to a South American operator $($you will use this information in assignment question two below$).$ After

the $8-$year period $($assuming you undertake the retrofit and still own the cars$),$ the cars are sold for scrap,

which generates $$5,000$ per car. Assume an $8$ percent discount rate and a $20$ percent tax rate. Railroad

tank cars are depreciated over their useful life using straight line depreciation with no salvage value. You

estimate depreciation expense based on your previous average acquisition cost, which is $$285,000$ per

tank car. When calculating the daily cash flows, et cetera, use a $360-$day year. Using discounted cash flow

analysis, what is the value of the $200$ railroad tank cars? What is the cost of the $200$ railroad tank cars?