Lon Timur is an accounting major at a midwestern state university located approx

Question

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 theweekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information. Compute (1) the cash payback period Annual rate of return Compute the net present value of the commuter service.

Explanation / Answer

Net Income Revenue 5 van* 6 student*10 trip*30 week *11.99 rate 107910 Expense Depreciation 75700/3 25233 Driver payroll 48002 Out Of Pocket expense 15995+3309+4000+4203+2510 30017 Net Income 4658 Net Annual Cash flow =net income+Depreciation 4658+25233 29891 Payback period =75700/29891 2.53 years Annual rate of return 4658/75700 4.32% Period Cash flow PV Factor 0 -75700 1 -75700 1 29891 0.8696 25992.17 2 29891 0.7561 22601.89 3 29891 0.6575 19653.82 NPV -7452.12

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.