%24 2. 3. 4. Sheridan 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. Sheridan, 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. Sheridan has gathered the following investment information. 1. Sheridan plans to use straight-line depreciation. Five used vans would cost a total of 573,455 to purchase and would have a 3-year useful life with negligible salvage value. Ten drivers would have to be employed at a total payroll expense of $49,000. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $15,900, Maintenance S3,600, Repairs $3,800, Insurance $3,900, and Advertising S2,300, Sheridan 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. Sheridan expects each van to make 10 round trips weekly and carry an average of 6 students each trip. The service is expected to cperate 30 weeks each year, and each student will be charged $12 fora round-trip ticket. Click here to view PV table. (a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to O decimal places, e.g. 25): Net income Net annualcash flows () Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimIal places, e.g 1050.) Cash payback period Annual rate of return (c) Compute the net present value of the commuter service. (Round answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg-45 orparentheses eg (45) For calculation purposes, use 5 decimal ploces as displayed in the) factor table provided.) 5. eTextbook and Media Savefor Lacen Attempts: 0 of 3 used Submit Answer

%24 2. 3. 4. Sheridan 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. Sheridan, 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. Sheridan has gathered the following investment information. 1. Sheridan plans to use straight-line depreciation. Five used vans would cost a total of 573,455 to purchase and would have a 3-year useful life with negligible salvage value. Ten drivers would have to be employed at a total payroll expense of $49,000. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $15,900, Maintenance S3,600, Repairs $3,800, Insurance $3,900, and Advertising S2,300, Sheridan 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. Sheridan expects each van to make 10 round trips weekly and carry an average of 6 students each trip. The service is expected to cperate 30 weeks each year, and each student will be charged $12 fora round-trip ticket. Click here to view PV table. (a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to O decimal places, e.g. 25): Net income Net annualcash flows () Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimIal places, e.g 1050.) Cash payback period Annual rate of return (c) Compute the net present value of the commuter service. (Round answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg-45 orparentheses eg (45) For calculation purposes, use 5 decimal ploces as displayed in the) factor table provided.) 5. eTextbook and Media Savefor Lacen Attempts: 0 of 3 used Submit Answer

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter9: Deductions: Employee And Self-employed-related Expenses

Section: Chapter Questions

Problem 49P

See similar textbooks