A Transit district has asked for your assistance in determining the proper fare for its bus...

  

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A Transit district has asked for your assistance in determining the proper fare for its bus system. An effective annual interest rate of 7% is to be used. The following additional information was compiled for your study. Cost per bus: $60,000 Bus life: Salvage value: $10,000 Miles driven per year 37,440 Number of passengers per year: Operating cost: thereafter. 20 years Y= 1.00 + 0.10x $1.00 per mile in the first year, increasing $0.10 per mile each year 80,000 • If the fare is to remain constant for the next 20 years, what is the break-even fare per passenger? If per-passenger fare to be set at $0.35 for the first year, by what amount should the per- passenger fare go up each year thereafter such that the district can break even in 20 years? If for the first year $0.45 per passenger has been set, and fare goes up $0.05 each year thereafter, would additional governmental subsidy (per passenger) be needed for the district to break even in 20 years? A Transit district has asked for your assistance in determining the proper fare for its bus system. An effective annual interest rate of 7% is to be used. The following additional information was compiled for your study. Cost per bus: $60,000 Bus life: Salvage value: $10,000 Miles driven per year 37,440 Number of passengers per year: Operating cost: thereafter. 20 years Y= 1.00 + 0.10x $1.00 per mile in the first year, increasing $0.10 per mile each year 80,000 • If the fare is to remain constant for the next 20 years, what is the break-even fare per passenger? If per-passenger fare to be set at $0.35 for the first year, by what amount should the per- passenger fare go up each year thereafter such that the district can break even in 20 years? If for the first year $0.45 per passenger has been set, and fare goes up $0.05 each year thereafter, would additional governmental subsidy (per passenger) be needed for the district to break even in 20 years?

Answer rating: 100% (QA)

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