Sheridan College of Puxton Park (SCPP) is trying to determine if it is more cost effective to reimburse employees for mileage in traveling to educational conferences or should the college purchase a vehicle to be used for employee travel to conferences. The following information has been provided with regards to the decision: Annual miles driven by employees to conferences 32000 Travel reimbursement rate per mile $0.56/mi. Purchase price - new vehicle (5 year useful life) $31000 (no salvage value) Annual Maintenance - new vehicle Annual vehicle insurance & registration $1200 $2700 Given the quantitative information for the two options, which option would you select as most beneficial to SCPP and why? O The option to purchase the new vehicle should be selected with a total annual cost of $6200 whereas, the option to continue mileage reimbursement will cost $17920. O The option to purchase the new vehicle should be selected with a total annual cost of $10100 whereas, the option to continue mileage reimbursement will cost $17920. O The option to continue mileage reimbursement should be selected since it will only cost $17920 whereas, the option for the new vehicle will cost $34900. O The option to continue mileage reimbursement should be selected since it will only cost $17920 whereas, the option for the new vehicle will cost $31000.
Sheridan College of Puxton Park (SCPP) is trying to determine if it is more cost effective to reimburse employees for mileage in traveling to educational conferences or should the college purchase a vehicle to be used for employee travel to conferences. The following information has been provided with regards to the decision: Annual miles driven by employees to conferences 32000 Travel reimbursement rate per mile $0.56/mi. Purchase price - new vehicle (5 year useful life) $31000 (no salvage value) Annual Maintenance - new vehicle Annual vehicle insurance & registration $1200 $2700 Given the quantitative information for the two options, which option would you select as most beneficial to SCPP and why? O The option to purchase the new vehicle should be selected with a total annual cost of $6200 whereas, the option to continue mileage reimbursement will cost $17920. O The option to purchase the new vehicle should be selected with a total annual cost of $10100 whereas, the option to continue mileage reimbursement will cost $17920. O The option to continue mileage reimbursement should be selected since it will only cost $17920 whereas, the option for the new vehicle will cost $34900. O The option to continue mileage reimbursement should be selected since it will only cost $17920 whereas, the option for the new vehicle will cost $31000.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Sheridan College of Puxton Park (SCPP) is trying to determine if it is more cost effective to reimburse employees for mileage in
traveling to educational conferences or should the college purchase a vehicle to be used for employee travel to conferences. The
following information has been provided with regards to the decision:
Annual miles driven by employees to conferences
32000
Travel reimbursement rate per mile
$0.56/mi.
Purchase price - new vehicle (5 year useful life)
$31000 (no salvage value)
Annual Maintenance - new vehicle
Annual vehicle insurance & registration
$1200
$2700
Given the quantitative information for the two options, which option would you select as most beneficial to SCPP and why?
O The option to purchase the new vehicle should be selected with a total annual cost of $6200 whereas, the option to
continue mileage reimbursement will cost $17920.
O The option to purchase the new vehicle should be selected with a total annual cost of $10100 whereas, the option to
continue mileage reimbursement will cost $17920.
O The option to continue mileage reimbursement should be selected since it will only cost $17920 whereas, the option for the
new vehicle will cost $34900.
O The option to continue mileage reimbursement should be selected since it will only cost $17920 whereas, the option for the
new vehicle will cost $31000.
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