Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Timur is an accounting major at a midwesternstate university located approximately 60 miles from a major city. Mary of the students attending the university

image text in transcribed
image text in transcribed
Blossom Timur is an accounting major at a midwesternstate university located approximately 60 miles from a major city. Mary of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Blossom, an entrepreneur at heart, realizes that few good cominuting alternatives are avallable for students doing weekend travel, He believes that a weekend commtwing service could be organized and run profitably from several suburban and downtown shopping mall locations Blossom has gathered the following investrent information. 1. Five used vans would cost a total of $74.429 to purchase and would have a 3 year useful life with negligible salvage value. Blossom plans to tse straight-line depreciation. 2. Ten drivers would have to be employed at a total poyroll expense of 548,900 . 3. Other annual out of pocknt expenses associated with running the commuter service would include Gasoline $15,900, Maintenance $3,500, Repairs $4,400, Insurance $4,400, and Advertising $2,600. 4. Blosson 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 copital. 5. Biossom expects each van to make 10 round trips weekly and carry an average of 6 students each trip. The service is expected to operate 30 weeks each year, and each student wil be char ged $12 for a round-trip tichet. Click here to view PV table (a) Determine the anxual (1) net incorne and (2) net annua) canh flows for the commuter service, fRound anowen to 0 decimal ploces, es 125. Net income Net annal cash flows (a) Determine the annua (1) net income and (2) net annual cash flows for the commuter service. (Round answers to O decimal ploces, es. 125.) Net income Net annual cash flows (b) Compute (1) the cash payback period and (2) the anmual rate of return. (Round onswers to 2 decimal places, eg. 10.50) Cash payback period vears Annual rate of return (c) Compute the net present value of the commuter service. (Round anwer to 0 decimal ploces es. 125. If the net present volue is negative. use elther a negotive sign preceding the number 645 or parentheses es (45). For colculation pumposes, use 5 decimal ploces as dipployed in the (actor table provided.) Net present value Attempts: of 7 used

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Certificate Of Cloud Auditing Knowledge Study Guide

Authors: Isaca

1st Edition

1604208619, 978-1604208610

More Books

Students also viewed these Accounting questions

Question

Identify the primary causes of conflict in the work setting.

Answered: 1 week ago

Question

5. Recognize your ability to repair and let go of painful conflict

Answered: 1 week ago