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 woekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Con has gathered the following investment information 1. 2 3 Five used vans would cost a total of 574,676 to purchase and would have a 3 year useful life with negligible salvape value. Lon plans to use straight line depreciation Ten drivers would have to be employed at a total payroll expense of 549,000. Other annual out-of-pocket expenses asociated with running the commuter service would include Gasoline $15.900. Maintenance 53,300 Repairs $4 100. Insurance $1,100, and Advertising 2.200 Lonas visited several financial institutions to discuss tunding the best interest rate he has been able to negotiate is 15% Use this rate for cost of capital Los expects each van to make tenround trip wally and carry an average of six students each trip. The services pected to operate 30 works each year and each student will be charged $12 for around trlo ticket 4 3 Click here to view Pabe (6) (a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. Round answers to decimal places, es 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, s. 10.50.) Cath payback period years X Annual rate of return Id Compute the represent value of the commuter service. (Round answer to decimal places, s. 125. the net present value is negative. use either a negative in preceding the number 45 or parentheses (45) For calculation purposes, use 5 decimal places as played in the factor tobe provided) Net presente