This paper circulates around the core theme of what should Lon conclude from these computations? together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Lon Timur is an accounting major 1 answer below » 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, realizes that few good commitive 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.1. 5 used vans would cost a total View complete 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 the weekends. Lon, an entrepreneur at heart, realizes that few good commitive 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.1. 5 used vans would cost a total of $75,000 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation,2. Ten drivers would have to be employed at a total payroll expense of $48,000.3. Other annual out-of-pocket expenses associated with running the computer service would include gasoline $16,000, maintenance $3,300, repairs $4,000, insurance $4,200, advertising $2,500.4. 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.5. Lon expects each van to make ten round trios 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 $12.00 for a round-trip ticket. ‘Inst-s:a) determine the annual (1) net income and (2) net annual cash flows for the commuter service.b) compute (1) the cash payback period and (2) the annual rate of return (round to two decimals).c) compute the net present value of the commuter service (round to the nearest dollar).d) what should Lon conclude from these computations? View less » Dec 02 2015 04:54 AM
