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 usestraight-line depreciation. 2. Tendrivers would have to be employed at a total payroll expense of $47.400. 3. Other annual out-of-pocket expenses assocated with running the commuter service would include Gasoline $15,800, Maintenance $3,200, Repairs $3,700, Insurance $4,400 and Advertising $2,800. 4. Lon 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 capital. 5. Lon expects each van to make ten round trips weekly and camy an average of six students each trip. The service is expected to operate 30 weeks each year, and each student will be charsed $12 for a round-trip ticket Determine the annaal (1) net income and (2) net anncal cashflows for the commuter service (Round drowers to 0 decimai ploces, ey: 125.) (b) Compute (1) the cash paybuck period and (2) the annual rate of retum, Ripund aniwers to 2 decimal ploces. Compute (1) the cash payback period and (2) the snual rate of retum. thound answen ta 2 decled pidcen ex. 10503 factor bathe provided) 1qe prasent value