Question
In: Accounting
Pete Castillio, the owner manager of Kamloops Cab Company, is considering purchasing a new all electric...
Pete Castillio, the owner manager of Kamloops Cab Company, is considering purchasing a new all electric unit for his taxi fleet. Pete has been focusing on upgrading from his current reliable fleet of hybrid vehicles to fully plug in electric vehicles as he believes the reduced maintenance and increased reliability of these vehicles is a worthwhile venture. The electric automobile would cost $50,000 (CCA class 16 - 40%) and would have a salvage value of $2,500 as the current unit at the end of the fifth year. Based on his previous experience, he projects daily revenues of $375 from this new taxi unit and average operating costs of $4,600 per month for incremental fuel and maintenance expenses and $65,000 per year for a driver salary. Kamloops Cab Company maintains an average marginal tax rate of 35% and Pete expects a minimum after-tax return of 15% on his taxi investments. Required – submit your handwritten response via the assignment moodle dropbox to the following: 1) Compute the net present value of this investment. Show all details of your calculations. 2) Discuss any additional quantitative and/or qualitative issues of your analysis. .
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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