P 26 - 68 Cindi Austen 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 Cindi an entrepreneur at heart , realizes that few good commuting alternatives are available for students doing weekend travel . She believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations . Cindi has gathered the following investment information , 1 . Six used vans would cost a total of $96 090 to purchase and would have a 3 year useful life with negligible salvage value . Cindi plans to use straight - line depreciation . 2 . Ten drivers would have to be employed at a total payroll expense of $70 000 3 . Other annual out -of pocket expenses associated with running the commuter service would include gasoline $28 000 maintenance $2 800 repairs $3 500 , insurance $3 200 , and advertising $1 500 . ( Exclude interest expense . ) Cindi has visited several financial institutions to discuss funding for her new venture . The best interest rate she has been able to negotiate is 109. Use this rate for cost of capital 5 . Cindi expects each van to make ten round trips weekly and carry an average of five students ach trip . The service is expected to operate 30 weeks each years Each student will be charged $1600 for a round trip ticket . instructions ( 2 ) Determine t he annual ( 1 ) net income , and ( 2 ) net cash flow for the commuter service ( 6 ) Compute ( 1 ) the annual rate of return , and ( 2 ) the cash payback period . ( Round to two decimals . ) ( * ) Compute the net present value of the commuter service . ( Round to the nearest dollar . ) ( 1 ) What should Cindi conclude from these computation