How much the company will save for the fleet over course

Reference no: EM133465605

Assignment: Capital Budgeting Project

Your company is considering purchasing a fleet of 10 vehicles for the sales staff. You have been tasked with obtaining information and performing the analysis. Currently, the company reimburses employees for the use of their personal vehicle at $.55 per mile. Each of the sales staff (10 of them) averages approximately 500 per week over the course of the year. The purpose of the vehicles is to support sales staff in the DFW area for at least five years. The cars should be a mid-level style. You should select one from three different auto manufacturers and select at least one EV.

Question A. Collect information on the price (use MSRP less 10% as the company is making a bulk purchase).

Question B. Collect information on the MPG/electric charge costs (use gas prices at $3.20 per gallon that will increase 3% over the next 5 years) (Research EV charge costs at a charging station- adjust for a 3% increase over the next 5 years)

Question C. Make reasonable estimates on maintenance costs over the five-year period.

Question D. Insurance is set at $80 per month and will increase 3% over the next 5 years.

Question E. Assume your interest rate is 5.25% for purchase with an estimated salvage value of 30% of original cost.

Question F. Consider how much the company will save/spend for the fleet over the course of one year, five years.

Question G. Consider if the project has a positive NPV, IRR, Payback with any cost savings.

Question H. Discuss qualitative aspects of this decision.

Reference no: EM133465605

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