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Pharoah College of Puxton Park (PCPP) is trying to determine if it is more cost effective to reimburse employees for mileage in traveling to educational

Pharoah College of Puxton Park (PCPP) is trying to determine if it is more cost effective to reimburse employees for mileage in traveling to educational conferences or should the college purchase a vehicle to be used for employee travel to conferences. The following information has been provided with regards to the decision:

Annual miles driven by employees to conferences 25500 Travel reimbursement rate per mile $0.5 6/mi. Purchase price - new vehicle (5 year useful life) $24500 (no salvage value) Annual Maintenance - new vehicle $875 Annual vehicle insurance & registration $2375

Given the quantitative information for the two options, which option would you select as most beneficial to PCPP and why?

O The option to purchase the new vehicle should be selected with a total annual cost of $8150 whereas, the option to continue mileage reimbursement will cost $14280. O The option to continue mileage reimbursement should be selected since it will only cost $14280 whereas, the option for the new vehicle will cost $24500. O The option to purchase the new vehicle should be selected with a total annual cost of $4900 whereas, the option to continue mileage reimbursement will cost $14280. O The option to continue mileage reimbursement should be selected since it will only cost $14280 whereas, the option for the new vehicle will cost $27750.

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