A private school is considering the purchase of six school buses to transport students to and from school events. The initial cost of the buses is $600,000. The life of each bus is estimated to be 5 years, after which time the vehicles would have to be scrapped with no salvage value. The school’s management team has derived the following estimates for annual revenues and cost for the next 5 years. Year 1Year 2Year 3Year 4Year 5Revenues$330,000$330,000$350,000$380,000$400,000Driver costs$33,000$35,000$36,000$38,000$40,000Repairs and maintenance$8,000$13,000$15,000$16,000$18,000Other costs$130,000$135,000$140,000$136,000$142,000Annual depreciation$120,000$120,000$120,000$120,000$120,000 The buses would be purchased at the beginning of the project (i.e., in Year 0) and all revenues and expenditures shown in the table above would be incurred at the end of each relevant year. Because schools are exempt from taxes, the school’s corporate tax rate is 0 percent. A business consultant has advised management that they should use a weighted average cost of capital (WACC) of 10.5% to evaluate this project. Net present value of $30,966.43. Which of the three evaluation techniques that was computed (i.e., payback period, IRR and NPV), should the firm use to make its decision of whether or not to accept this project? (see attachment) Why did you choose this technique? Is one of these techniques better than the others and if so, why? Finally, what are some risk factors inherent in this capital budgeting analysis? Make a list of at least three items that could cause the outcome of this project to be substantially worse than management currently expects (as reflected in their revenue and cost estimates, WACC estimate, etc.). Fully explain each of the risk factors you identify. Length: 4-5 pages, not including title page and references; (You may wish to include an appendix to accommodate tables and figures.) References: You are expected to provide at least three references for this assignment. Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic
RECENT ASSIGMENTS
Research and Support Material Worksheet
Discuss and demonstrate professional demeanor in your writing and critical thought throughout your paper.
Write a paper on Dystopia how food prices are going up.
Explain how well you support your assertions, did you provide examples, how well did you contextualize the content, and how well did you employ ‘terms of art’.
Discuss the major points made in the essay and evaluate whether you agree or disagree with the author’s overall conclusion.
Write a research paper on recognize the relationship of criminal justice system components and processes with society and government.
Write a research paper on the effects of child abuse within the family.
Discuss the difference between homologues and analogues structures (including divergent and convergent evolution).
Is a degree from an online college or university as legitimate as a degree from a brick-and-mortar university?
Write history books covering any theme in US History from the colonial years through the late 1860s.
Need Help Writing an Essay?
Tell us about your assignment and we will find the best writer for your paper.
Get Help Now!Ask for Instant Assignment Writing Help. No Plagiarism Guarantee!
Online assignment writing service website that provide students with original and unique academic essays, research proposals, research papers, term papers, movie reviews, Book reviews, scholarship essays, personal statements, projects, presentations, dissertation, theses, admission essays, annotated bibliographies, reports, application papers, among others.
Stuck on a homework question? Our verified assignment writers can answer all questions, from basic math to advanced rocket science!
