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The Bryant Car Rental Corporation is contemplating expanding its short-term rental fleet by 25 automobiles at a cost of $625,000. It expects to keep the

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The Bryant Car Rental Corporation is contemplating expanding its short-term rental fleet by 25 automobiles at a cost of $625,000. It expects to keep the autos for only two years and to sell them at the end of that period for 60 percent, on average, of what they cost. The plan is to generate $16,500 of incremental revenue per additional auto in each year of operation. The controller estimates other costs will amount to 12 cents per kilometre on an average of 40,000 kilometres per car per year. She also estimates that the new business will require an investment of $5,000 in additional working capital. The firm is in a 40 percent tax bracket and uses 11 percent as a cost of capital Should Bryant purchase the automobiles

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