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Michael Williams is a freshman in an undergraduate finance program in Dallas, TX, who is looking for a part- time job. He does some research

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Michael Williams is a freshman in an undergraduate finance program in Dallas, TX, who is looking for a part- time job. He does some research on Uber and collect the following data from various forums where current Uber drivers are posting: Average earnings per hour: $22 Average trips per hour: 2.6 Average length of trip: 7.7 miles Average duration of trip: 17.6 minutes The data looks attractive to Michael. He considers buying a used hybrid car for $16,000. After making some research on various lenders, he finds out that he can obtain a 4-year loan at 5.99%. Monthly insurance on the new vehicle will be $80. Estimated salvage value of the car at the end of 4 year is $6,450. New hybrid car that Michael is planning to buy can get 50 mpg and he expects gas price to be around $2 per gallon. a. Assuming that he can drive 20 hours per week on average for the next four years, what is the expected monthly revenue? b. What is the monthly car loan payments? c. What is the expected gas cost per month? d. If Michael does not drive for Uber, his alternative is to work at the campus for $12 per hour. Assuming that he can work for 20 hours per week, what is the monthly opportunity cost of driving for Uber? e. What is the expected monthly cash flows (months 1 through 47) that Michael can generate after considering for car loan payments, insurance, gas and opportunity cost? f. What is the last month expected cash flow, assuming that Michael will be able to sell this car at the salvage value? 8. What is the NPV of annual cash flows, using an interest rate of 6.0%? h. What is the IRR of the annual cash flows? I, What is the payback period? J. Based on your calculated NPV, IRR and payback period, should Michael drive for Uber for the next four years

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