Kamloops Bike Ranch

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 litre. 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%

1. Compute the following individual net present value for the new medium-size Huckwagon mountain bike trailer (Note: treat GST amounts paid as working capital recovered at acquisition as they are refundable to the company). Provide comments on your results.