Matt Simpson owns and operates Quality Craft Rentals, which offers canoe rentals and shuttle service on the Nantahala River. Customers can rent canoes at one station, enter the river there, and exit at one of two designated locations to catch a shuttle that returns them to their vehicles at the station they entered. Following are the costs involved in providing this service each year:
Fixed Costs Variable Costs
Canoe maintenance $ $
Licenses and permits
Vehicle leases
Station lease
Advertising
Operating costs
Quality Craft Rentals began business with a $ expenditure for a fleet of canoes. These are expected to last more years, at which time a new fleet must be purchased. Rentals have been stable at about per year.
Required:
Matt is happy with the steady rental average of per year. For this number of rentals, what price should he charge per rental for the business to make an annual beforetax return on assets using lifecycle costs? Do not round intermediate calculations. Round your answer to decimal places.
