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The taxi company you work for is considering buying a $50,000 car which they expect to last two years. The company will borrow the entire
The taxi company you work for is considering buying a $50,000 car which they expect to last two years. The company will borrow the entire $50,000 to pay for the car at an interest rate of 16%. The car is expected to generate $36,000 in revenues per year. Operating & Maintenance O&M costs are $5,000 per year. The taxi company uses the (single) declining balance method for depreciation on the car ie = 1. The salvage value of the car at the end of the two years is expected to be $15,000. The tax rate is 20%. The companys minimum acceptable rate of return (MARR) is 20%. You may use Excel (and the Excel functions) if you like or do the following financial statements by hand. If you use Excel, screenshot your Excel sheet and put the picture in your pdf. Write your answers to two decimal places if they are not whole numbers. a. Create the Income Statement for this investment. (8) b. Create the Statement of Cash Flows for this investment
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