### Financial Analysis Exercise#### Task (b)Compute the following financial metrics:1. **Cash Payback Period**: Determine how many years it will take to recover the initial investment. - Cash payback period: [Input Box] years2. **Annual Rate of Return**: Calculate the annual percentage return on the investment. - Annual rate of return: [Input Box] %**Note:** Round your answers to two decimal places (e.g., 10.50).#### Task (c)Compute the **Net Present Value (NPV)** of the commuter service project:- Net present value: [Input Box]**Important Instructions:**- Round your answer to zero decimal places (e.g., 125).- If the net present value is negative, indicate with a negative sign (e.g., -45) or enclose in parentheses (e.g., (45)).- For calculation purposes, use five decimal places as displayed in the provided factor table. **Investment Information for a Weekend Commuter Service**Lon Timur, an accounting major at a midwestern state university approximately 60 miles from a major city, has identified a business opportunity to create a weekend commuting service for students. Based on his findings, Lon has gathered the following financial details to determine the viability of his investment:1. **Vehicle Costs**: - Five used vans are required, costing $75,000 in total. - These vans have a 3-year useful life with negligible salvage value and will use straight-line depreciation.2. **Employment Costs**: - Ten drivers need to be hired at a total payroll expense of $48,000 annually.3. **Additional Expenses**: - Running costs of the service include: - Gasoline: $16,000 - Maintenance: $3,300 - Repairs: $4,000 - Insurance: $4,200 - Advertising: $2,5004. **Cost of Capital**: - After consulting several financial institutions, Lon has negotiated a cost of capital at an interest rate of 15%.5. **Revenue Projections**: - Each van is expected to make 10 round trips weekly, carrying an average of 6 students per trip. - The service will operate for 30 weeks each year, charging each student $12 for a round-trip ticket.**Financial Calculations Required**(a) Determine the annual (1) net income and (2) net annual cash flows for the commuter service. Please round your answers to 0 decimal places.- **Net Income**: $[Input Field]- **Net Annual Cash Flows**: $[Input Field]**Note**: Click the link to view the factor table needed for calculations.

Net income refers to the amount an individual or business makes after deducting costs , allowances and taxes. It is the amount of accounting profit of a company has left over after paying off all its expenses.Answer -a Annual revenues = 5 vans * 10 round trip per week * 30 weeks per year * 6 students per trip * $12 per trip. =$108000. Total cost including depreciation = ($48000+$16000+$3300+$4000+$4200+2500+75000/3. =$103000. Net income = ($108000-$103000).=$5000. Net annual cash flows = Net income + Annual depreciation. = $5000+25000. = $30000.Answer -b Payback period = Initial investment / Net annual cash flows . = 75000 / $30000. =2.50 years. Annual rate of return = Net income / Average investment . = $5000 / (75000/2). =13.33%. Answer -c Net present value = Annual cash flows * PVA (15%,3 years) - initial investment. = $30000*2.2832 - $75000. = -$6504.