RERIMER Problem 24-2A 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, realize that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organired 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 $76,000 to purchase and would have a 3-year useful life with negligible salvage value. Con plans to use straight-line depreciation 2. Ten drivers would have to be employed at a total payroll expense of $47,990. 3. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $15,990, Maintenance $3,290, Repairs $4,000, Insurance 84,210, and Advertising $2,500. 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 S. Lon expects each van to make ten round trips weekly and carry an average of six students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $12.05 for a round-trip ticket. 4 (b) Compute (1) the cash payback period and (2) the annual rate of return (Round answers to 2 decimal places, e.g. 10.50.) years Cash payback period Annual rate of return (c) Compute the net present value of the commuter service. (Round answer to decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided) Net present value Click if you would like to Show Work for this questioni Open Show Work