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Question 7 Lon 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. Lon, an entrepreneur at heart,realizes that few good commuting alternatives are available for students that a weekend commuting service could be organized and suburban and downtown shopping doing weekend travel. He believes un profitably from several suburban and downtown shopping mall locations. Lon has gathered the following Investment 1. Five used vans would cost a total of s 75,900 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation 2. Ten drivers would have to be employed at a total payroll expense of $ 48,010. out-of-pocket expenses associated with running the commuter service would include Gasolline $ 16,000, Maintenance $ 3,310, Repairs $4,000, Insurance $ 4,200.and Advertising $ 2,490 4. Lon has visited several financial S. Lon expects cach institutions to discuss funding. The best interest rate he has been able to negotiate is 15%. Use this rate for cost of capital. van to make ten round trips weekly and carry an average of six students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $ 1195 for a round-trip ticket Click here to view PV table. Determine the annual () net income and (2) net annual cash flows for the commuter service. (Round answers to O decimal places.es 125) Net income Net annual cash flows$ Compute(1) the cash payback period and(2) the annual rate of return.(Round answers to 2 decimal places,es, 10.50 Cash payback period Annual rate of returrn Compute the net present value of the commuter service. (Round answer to o or parentheses es (45) For calculation decimal places. es 125. if the net present value is negotive,use either a negative sign precedins the number es-45 purposes, use 5 decimal ploces as displayed in the factor table provided. Net present value

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