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 CostsVariableCosts$ 9.50$ 3,0003,70006,10007,62006,70021,7007.507.50Quality Craft Rentals began business with a $28,000 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 7,000 per year.Required:Matt is happy with the steady rental average of 7,000 per year. For this number of rentals, what price should he charge per rental forthe business to make an annual 16% before-tax return on assets using life-cycle costs? (Do not round intermediate calculations.Round your answer to 2 decimal places.)Answer is complete but not entirely correct.Price per rental$6.85 x

To determine the price per rental that Matt should charge to achieve a 16% before-tax return on…

Answered: Matt Simpson owns and operates Quality…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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