Transco plans on purchasing a bus for 75000 that will have

Reference no: EM13599993

Transco plans on purchasing a bus for $75,000 that will have a capacity of 40 passengers. As an alternative, a larger bus can be purchased for $95,000 that will have a capacity of 50 passengers. The salvage value of either bus is estimated to be $8,000 after a 10-year life. If an annual net profit of $400 can be realized per passenger, which alternative should be recommended using a management-suggested interest rate of 15%? Using the actual cost of money at 7.5%?

Reference no: EM13599993

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