In 2019, this shuttle service continues at seven days per week with the help of employee drivers. Each operating day averages 30 trips over an extended 8-hour operating period. Shuttle cycle time will be reduced to every 15 minutes (4 per hour) from every 12 minutes (5 per hour) in 2018 to conserve fuel and increase the number of passengers on each trip. The minimum capacity of the new smaller shuttle van is 9 passengers per trip (see next section).

For 2019, shuttle ride prices increased to $4 per ride or 6 rides for $20 on a punch card. Methot decided that this increase is necessary to due to increased operating expenses fuel, insurance, and additional employee driver costs. It is expected that 90% of the passengers will purchase punch cards and the remainder will pay cash.

Methot notes two (2) additional drivers would share the 7 days each week at the rate of $18 per hour ($15 per hour plus mandatory payroll taxes) if hired as employees in 2019. Gasoline and minor maintenance expenses are estimated to average $2.10 per round trip cycle assuming an average cost of $1.30 per liter. Fixed expenses would include insurance of $5,000 for the season, government inspections and fees of $500 and an allowance for major maintenance of $3,000 annually.

An estimate of the expected average utilization of rate of a 9-passenger van is:

Day count	Weekdays		% Util		Weekend		% Util		Total			Average
April-19	18		30%		12		55%			30		40.0%
May-19	17	40%			14	90%			31			62.6%
June-19	16	40%			14	90%			30			63.3%
July-19	18	75%			13	80%			31			77.1%
August-19	16	75%			15	80%			31			77.4%
September-19	16	40%			14	60%			30			49.3%
October-19	18	25%			13	60%			31			39.7%

Weekend days include Friday, Saturday, Sunday and Statutory Holidays

Based on the success of the summer 2018 season, Methot believes that the Kamloops Bike Ranch operation would sustain a new smaller shuttle van. With the commitment to Sun Peaks Resort he knows that he cannot be in two places at once and that by the middle of June 2019 he needs to have a second van and bike trailer for use at the Kamloops Bike Ranch to maintain consistent and reliable service.  

Ford Transit’s passenger wagon series has numerous configurations including engines, various roof heights and seating from 8 to 15 passengers. Methot believes a smaller configuration with a regular wheelbase, medium roof height and 10 passenger seating (a driver and 9 paying passengers). The smaller unit is capable of towing and would be better suited for use at the Kamloops Bike Ranch where the trip involved driving on paved city streets.

Methot browsed the Ford.ca2 site to the 2019 Transit page. He selected the passenger van with medium roof, regular length, 3.5 L Eco Boost® engine, 8550 Gross Vehicle Weight Rating, 3.31 Limited Slip Axle and 6-Speed automatic transmission. He selected the XLT model and added the following options: trailer towing package and brake controller, two spare keys, alarm, running boards, trailer brake control, privacy windows, Long-arm power heated mirrors, and 10-seat pewter cloth configuration.

Including delivery to Kamloops at the end of May 2019, the total cost of the van was $60,591 net of a $500 manufacturer’s rebate and inclusive of $6,492 in 12% taxes (5% federal GST and 7% provincial sales tax).

The finance rate for this unit is 2.99% through Ford Canada Credit. Total interest would be $4,717 with payments for this unit of $1,089 per month for 5 years (60 months). Methot estimates this unit to be worth $14,000 at the end of 5 years.

The Ford.ca site also allows you to research vehicles available at dealerships throughout Canada. Methot looked at various locations and found a new 2018 Ford Transit XLT 15 passenger T350 medium roof long wheelbase at Kentwood Ford in Edmonton, Alberta, Canada which is about 800 kilometers from Kamloops (Exhibit 8). It is a longer wheelbase unit with single rear wheels and is priced at $58,300 less $3,250 in rebates plus $1,150 for tow hitch, brake control and running boards which total of $56,000 before the 12% taxes of $6,720. This unit carries a finance rate of 6.29% and with no down payment the payments for this unit would be $1,220 per month for 5 years (60 months) with total interest of $10,550. Delivery to Kamloops would cost an additional $500 excluding taxes which would be paid directly. This unit would arrive in late January 2019. This unit is estimated to be worth $13,000 at the end of 5 years.

Methot also searched used car websites and located a used 2017 Ford Transit XLT 10 passenger T150 regular wheelbase (Exhibit 9) at Strathmore Ford near Calgary, Alberta, Canada located 700 kilometers from Kamloops. This van had 21,000 kilometers and included remaining factory warranty until September 2020. The total purchase price of $38,600 included $950 for tow hitch, brake control and running boards and $6,708 in 12% taxes. Additional out of pocket expenses before taxes included delivery to Kamloops of $500 and a British Columbia out of province inspection for a used vehicle was another $200. This unit would arrive in late January 2019. The monthly payments are $979 per month with total interest of $8,392 over a four-year period at a 10% interest rate. This unit is estimated to be worth $9,000 at the end of 5 years and would arrive in late January 2019. as it would be older and have higher tot kilometers.

The new shuttle van would require an initial vinyl graphics lettering with the Mostly Mental logo before use. Methot uses a local Kamloops firm to do this work at a cost of $750 before taxes which would be paid out of pocket. In addition, all 5% federal GST amounts are claimable as an input tax credit and refundable to Mostly Mental Shuttles when the van is acquired.

Compute the following individual net present value of each of the three shuttle van capital expenditures (Note: all GST amounts paid are working capital recovered at acquisition):

• a) new 2019 Ford Transit T150 10 passenger van 

• b) new 2018 Ford Transit T350 15 passenger van (Exhibit 8) 

• c) used 2017 Ford Transit T150 10 passenger van (Exhibit 9)