FastBus Inc. offers low-cost bus transportation between Philadelphia and New York City. The company has 2 buses, each bought for $300,000. Each bus can carry 40 passengers per trip and does 7 daily round trips between Philadelphia and New York City. The price of each one-way ticket is $12. The company sells 28 seats on average per one-way trip, so the load factor is 70%. The annual fixed cost of running the company is $3,000,000. The major variable cost in their line of business is gasoline, which costs $25 per one-way trip. Fast Bus Inc. buses operate 365 days a year. Define the return on invested capital as the ratio of the profits (PER YEAR) and the invested capital. You can draw an ROIC tree in the same way that we drew a KPI tree in class. Simply have the ROIC as “the root” of the tree instead of profits. Then answer the question: What is the current ROIC? (Please give your answer in decimal form. For example, 0.25 for 25%)
FastBus Inc.
FastBus Inc. offers low-cost bus transportation between Philadelphia and New York City. The company has 2 buses, each bought for $300,000. Each bus can carry 40 passengers per trip and does 7 daily round trips between Philadelphia and New York City. The price of each one-way ticket is $12. The company sells 28 seats on average per one-way trip, so the load factor is 70%.
The annual fixed cost of running the company is $3,000,000. The major variable cost in their line of business is gasoline, which costs $25 per one-way trip. Fast Bus Inc. buses operate 365 days a year.
Define the
What is the current ROIC? (Please give your answer in decimal form. For example, 0.25 for 25%)
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