Lon Timur is an accounting major at 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 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 $76,136 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 347400 3. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline 515.800, Maintenance $3.200, Repairs $3,700, Insurance $4,400, and Advertising $2,800 Lon has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiates 15%. Use this rate for cost of capital Lon expects each van to make ten round trips weekly and carry an average of six students each trio. The services expected to operate 30 weeks each year, and each student will be charged 512 for a round-trip ticket Activate Windows 4. 5 (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, eg. 10.50) Cash payback period years Annual rate of return 96 Activate Wind Golo (c) Compute the net present value of the commuter service. (Round answer to O decimal places, eg. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Net present value 8% 9% 10% 11% 12% 15% Table 1 Future Value of 1 (n) Periods 4% 5% 6% 7% 1.00000 1.00000 1.00000 1.00000 1.04000 105000 106000 107000 2 1.08160 1.10250 1.12360 1.14490 0 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1 1.08000 1.09000 1.10000 1.11000 1.12000 1. 15000 1.16640 1.18810 1 21000 1.23210 1.25440 1 32250 3 1.12486 1.15763 1.19102 1.22504 1.25971 1.29503 1.33100 1.36763 1 40493 1.52088 4 1.21551 1.26248 1.16986 1.31080 1.36049 1.41158 146410 151807 1.57352 1.74901 5 1.21665 1.27628 1.33823 1.40255 1.46933 1 53862 1.61051 1.68506 201136 1.76234 6 1.50073 1.87041 1 34010 1.41852 1.26532 1.97382 231306 1.58687 1.67710 1.77156 7 1.50363 1.31593 140710 1.60578 1.71382 1.82804 2 66002 1.94872 2.07616 2.21068 8 1.36857 3.05902 1.47746 1.59385 1.71819 1.85093 199256 2.14359 2.30454 2.47596 9 1.42331 3.51788 1.55133 1.68948 1.83846 1.99900 2.17189 2 35795 2 55803 2.77308 3.10585 4,04556 10 1.48024 1.96715 2.15892 2.36736 2.59374 2.83942 1.62889 1.79085 4.65239 11 2.85312 3.15176 3.47855 1.53945 1.71034 1.89830 2.10485 233164 2.58043 2.51817 5.35025 2.81267 3.13843 3.49845 3.89598 12 1.60103 1.79586 2.01220 2.25219 13 1.66507 198566 2.13293 240985 271962 3.06581 3.45227 396328 4.36349 615279 14 1.73168 197993 2.26090 27 2.9379 334173 379750 31046 1,98711 7.0757 15 1.80094 207893 2.3968 275903 317217 364248 417725 478459 5.47357 8.13706 1 1.97299 218287 2.54035 2952 16 3.42594 3.37031 4.59497 5.31089 6.13039 435762 E 17 194790 229202 2.69277 3.15062 370002 4.32763 505447 589509 6.06604 1076126 18 202582 2.40662 2.85434 337993 390602 171712 5.55992 6.54355 768907 1237646 19 2. 10665 252696 3.02560 361653 431570 5.14166 6 1159 | 726334 8.61276 1-23177 20 219112 266330 3.20714 386968 4.66096 5.60441 6.72750 406231 9.64629 16.36654 Table 2 Future Value of an Annuity of 1 (n) Payments 5% 4% 6% 7% 8% 9% 10% 11% 12% 15% 1 1.00000 1.00000 1.00000 1.0000 1.00000 1.00000 1.00000 1.00000 1.00000 100000 2 2.04000 2.05000 206000 2.0700 208000 2.09000 2.10000 2.11000 2.12000 2 15000 3 3.12160 3.15250 3.18360 3.2149 3.24640 3.27810 3.31000 3.34210 3.37440 3.47250 4 4 24646 4.31013 437462 4.4399 4.50611 4.57313 4.64100 4.70973 4.77933 4 99338 5 5,41632 5.52563 5.63709 5.7507 5.86660 5.98471 6.10510 6.22780 6.35285 6.74238 6 6.63298 6.80191 6.97532 7.1533 7.33592 7.52334 7.71561 8.75374 7.91286 8.11519 8.39384 7.89829 8.6540 8.92280 9.48717 9.20044 8.14201 7 10.08901 978327 11.06680 9.54911 9.89747 10.2598 10.63663 11.02847 11.43589 9.21423 11.85943 8 12.29969 13.72682 13.02104 11.49132 11.9780 13.57948 12 48756 14.16397 9 10.58280 14.77566 16.78584 11.02656 14.48656 1672201 15.19293 15 93743 17.54874 12.00611 20.30372 12.57789 13.18079 10 13.8164 18.53117 16.64549 19.56143 20.65458 13.48635 17 56029 24 34928 11 14,20679 15.7836 14.97164 18.97713 29.00167 12 15.91713 16.86994 20.14072 21.38428 2271319 24.13313 15.02581 17 8885 28.02911 26 21164 34 35192 22.95339 24 52271 16.62684 17.71298 20.1406 13 18 88214 21.49530 14 22 5605 1959863 21.01507 18 29191 24.21492 2797496 2601919 1050471 30.09492 32 39260 25.1290 15 27 15211 3177242 34.40536 2002359 29 36092 2727972 21.57856 2327597 47 58041 2708] 35.94973 30 32428 32.00340 21.82453 39.18995 4275328 2365749 25.67253 16 5.71747 33.75023 6 97351 40.54470 44.50084 8. 88967 25.84037 6507409 28 21286 30.8402 17 23.69751 33.9990 37 45024 41.30 134 45.59917 0.39593 3090565 55.74972 75 83636 18 2564541 28 13238 37 3790 4601846 41 44626 5115909 6.93949 63.43966 2767123 3875999 38.21181 19 30.53900 5116012 409955 45.76196 5727500 64 20293 20 29.77806 3678559 7205244 10244356 33 06595 Table 3 Present Value of 1 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% (n) Periods 1 96154 95238 .94340 93458 92593 91743 90909 90090 89286 86957 2 92456 90703 89000 87344 85734 84168 82645 .81162 79719 75614 3 88900 86384 .83962 81630 79383 77218 .75132 73119 71178 65752 4 85480 82270 79209 76290 .73503 .70843 68301 65873 63552 57175 82193 .78353 74726 71299 68058 64993 .62092 59345 56743 49718 6 .79031 .74622 70496 66634 63017 59627 56447 53464 .50663 43233 7 75992 .71068 66506 .62275 58349 54703 51316 48166 45235 37594 8 .73069 67684 .62741 58201 54027 .50187 46651 43393 40388 32690 9 70259 .64461 59190 54393 50025 46043 42410 39092 36061 28426 10 55839 67556 .61391 50835 46319 42241 38554 35218 32197 24719 11 64958 52679 47509 58468 42888 31728 38753 28748 21494 35049 55684 12 49697 44401 62460 39711 .31863 35554 28584 18691 25668 41496 36770 28966 60057 46884 32618 25751 122917 16253 53032 13 14 50507 44230 57748 138782 34046 29925 23799 26333 20462 14 138 15 55526 48102 36245 41727 31524 13270 27454 12269 23939 20900 16 3391 39365 45811 33873 29189 25187 16312 21763 18629 10687 43630 31657 17 51337 37136 27027 23107 19785 14564 116963 09293 35034 29586 25025 19363 41552 21199 17986 15282 18 13004 08081 27615 23171 16351 13768 11611 47464 19449 39573 3305 07027 19 25042 17843 21455 12403 (14864 10367 45639 27689 131180 106110 20 Table 4 Present Value of an Annuity of 1 (n) Payments 4% 5% 6% 1 96154 95238 94340 7% 8% 9% 10% 11% 12% 15% 93458 92593 91743 90909 90090 89286 86957 2 1.88609 1.85941 1.83339 1,80802 1.78326 1.75911 1.73554 1.71252 1,69005 1.62571 3 2.77509 2.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 4 3.62990 3.54595 3.46511 3.38721 331213 3.23972 3.16986 3.10245 3.03735 285498 4.45182 4.32948 4.21236 4 10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5 6 5.24214 5.07569 4.91732 4.76654 4.62288 448592 4.35526 4.23054 4.11141 3.78448 6.00205 5.78637 7 5.58238 5,38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 8 9 7.43533 7.10782 6.80169 6.51523 6 24689 5.53705532825 4.77158 5.99525 5.75902 10 8.11090 7.72173 736009 7.02358 6.7100B 6.41766 6.14457 5.88923 5.650225.01877 8.76048 8.30641 7.88687 749867 7.13896 11 680519 6.49506 6206525.93770 5.23371 7 53608 12 9.38507 8.86325 8.38384 7.94269 7.16073 6.81369 6.49236 6.19437 5 42062 13 998565 9.39357 8.85268 8.35765 790378 748690710335674987 6.42355558315 13 9.98565 9.39357 8.85268 8.35765 790378 7.48690 7.10336 6.74987 6.42355 5.58315 14 10.56312 9.89864 9.29498 8.74547 8 24424 7.78615 736669 6.98187 6.62817 5.72448 15 11.11839 10.37966 9.71225 9.10791 8.55948 806069 6.81086 7 60608 7 19087 5.84737 16 10.83777 11.65230 10.10590 9,44665 8.85137 6.97399 5.95424 8.31256 7.82371 737916 17 12 16567 11.27407 10.47726 9.76322 9.12164 6.04716 8.54363 8.02155 754879 7.11963 7.24967 18 6.12797 12.65930 11.68959 10.05909 9.37189 8.75563 8.20141 7.70162 10.82760 19 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7839297.36578 6.19823 20 13,59033 12.46221 11.46992 7.96333 7.46944 6.25933 10.59401 9.81815 9.12855 8.51356 69 E pe here to search