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The equivalent cost per km for Option 2 is $ The equivalent cost per km for Option 1 is $ The cheaper option for the company is

The equivalent cost per km for Option 2 is $ The equivalent cost per km for Option 1 is $ The cheaper option for the company is

FINANCIAL ACCOUNTING
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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Option 1 - A company is currently paying its employees $0.38 per kilometre to drive their own cars on company business. Option 2 - The company is considering supplying employees with cars, which would involve purchasing at $25000, with an estimated three year life, a net salvage value of $8000, taxes and insurance at a cost of $900 per year, and operating and maintenance expenses of $0.22 per kilometre. If the interest rate is 10% and the company anticipates an employee's annual travel to be 22,000 kilometres, answer the following questions: (Keep 2 decimal places) The equivalent cost per km for Option 2 is $ The equivalent cost per km for Option 1 is $ The cheaper option for the company is
Transcribed Image Text:Option 1 - A company is currently paying its employees $0.38 per kilometre to drive their own cars on company business. Option 2 - The company is considering supplying employees with cars, which would involve purchasing at $25000, with an estimated three year life, a net salvage value of $8000, taxes and insurance at a cost of $900 per year, and operating and maintenance expenses of $0.22 per kilometre. If the interest rate is 10% and the company anticipates an employee's annual travel to be 22,000 kilometres, answer the following questions: (Keep 2 decimal places) The equivalent cost per km for Option 2 is $ The equivalent cost per km for Option 1 is $ The cheaper option for the company is
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