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 thatreturns them to their vehicles at the station they entered. Following are the costs involved in providing this service each year.Canoe maintenanceLicenses and permitsVehicle leasesStation leaseAdvertisingOperating costsFixed Costs$ 2,8003,5005,9007,420Price per rental6,50021,500Variable Costs$ 7.5000e5.505.50Quality Craft Rentals began business with a $30,000 expenditure for a fleet of 30 canoes. These are expected to last 10 more years, atwhich time a new fleet must be purchased. Rentals have been stable at about 7,400 per year..Required:Matt is happy with the steady rental average of 7,400 per year. For this number of rentals, what price should he charge per rental forthe business to make an annual 12% before-tax return on assets using life-cycle costs? (Do not round intermediate calculations.Round your answer to 2 decimal places.)

Fixed costs are those costs which does not changes with change in activity. Whereas, Variable costs…

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. Canoe maintenance Licenses and permits Vehicle leases Station lease Advertising Operating costs Fixed Costs $ 2,800 3,500 5,900 7,420 6,500 21,500 Variable Costs $7.50 Price per rental 0 0 e 5.50 5.50 Quality Craft Rentals began business with a $30,000 expenditure for a fleet of 30 canoes. These are expected to last 10 more years, which time a new fleet must be purchased. Rentals have been stable at about 7,400 per year.. Required: Matt is happy with the steady rental average of 7,400 per year. For this number of rentals, what price should he charge per rental for the business to make an annual 12% before-tax return on assets using life-cycle costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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. Canoe maintenance Licenses and permits Vehicle leases Station lease Advertising Operating costs Fixed Costs $ 2,800 3,500 5,900 7,420 6,500 21,500 Variable Costs $7.50 Price per rental 0 0 e 5.50 5.50 Quality Craft Rentals began business with a $30,000 expenditure for a fleet of 30 canoes. These are expected to last 10 more years, which time a new fleet must be purchased. Rentals have been stable at about 7,400 per year.. Required: Matt is happy with the steady rental average of 7,400 per year. For this number of rentals, what price should he charge per rental for the business to make an annual 12% before-tax return on assets using life-cycle costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter1: Introduction To Finance For Entrepreneurs

Section: Chapter Questions

Problem 7SEP

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