Cost Of Public Transportation

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Energy Cost
Throughout the United States, there is a movement to improve public transportation in a bid to reduce traffic congestions and the commute time of workers. In fact, this initiative to improve transportation has received a lot of support from the public in the form of passed ballot box measures. Americans across the nation have agreed to pay higher taxes in their community for the sole purpose of reinvesting into public transit. Transportation officials feel that the financial strain of car ownership, lack of space, fuel prices, and the damage to the ozone all create the perfect environment to encourage public transit growth. So widespread is this opinion that the federal government has even begun assisting transit projects …show more content…

With these values totaled, we then subtracted this figure from the amount of money received from the sale of the buses that year. We did this for each year, altering the values for expenses and fixed costs by the rate of inflation. We arrived at the cash flows for each year displayed in exhibit B and exhibit C. By looking at the cash flows for each engine, it would appear that the California Engine provides not only higher cash flows each year, but also ends the life of the project with a significantly smaller amount. This means that the cost of operating capital is being covered mainly by the cash inflows received annually. Meanwhile, the cash in-flow each year for the Los Angeles Engine is smaller than the California Engine, and at the end of the 20-year project, a remaining balance of $161,000,000 remains, meaning that our operating capital would not be close to being covered by just one year’s cash inflow.

Cost of Capital
California Best Trucks maintains a debt ratio of 60%. Due it’s bond rating, the company pays an interest of 6.5% on it’s debt. When we multiply the tax rate (adjusted by subtracting one from the marginal rate) by the debt ratio of 60% and then multiply by our interest rate of 6.5%, our

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