Question 23 of 23

Question 23 of 23 < John Johnson is an accounting maior 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, John. 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 anci downtown shopping locations. John has gathered the following investment informat ion. 2. 3. Five used vans would cost a total of S75.261 to purchase and would have a a-year useful life with negligible salvage value. john plans to use straight -line depreciation. Ten drivers would have to be employed at a total payroll expense of 100. Other annual oot -of-pocket expenses associated with running the commuter service would include Gasoline S16.400. Maintenance S 3.400. Repairs SZ.300. Insurance 34.700, and Advertising 52,700. John has visited several financial institutions to discuss funding. The best interest rate he been able to negotiate 15%. use this rate for cost ot capital John expects each van to make 10 round weekly an average of 6 students each trip. The to 30 weeks ?ach and each student will be for ticket.