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Keith Car Rental plans to start its business by bu...




Keith Car Rental plans to start its business by buying 10 cars at the average price of $18,000 each, depreciating them completely over 5 years using the straight-line method. It will rent space in a parking lot for $300 a month, paying the rent in advance each month. Keith expects that it will rent five cars on an average day, charging $40 per day per car. The maintenance expense for each car is $60 a month. After 5 years, Keith will sell the cars at 40% of the original value. Keith receives all the income and pays all the bills, (except rent) at the end of each month, but it pays the taxes once a year. Its income tax rate is 25% and it will use 12% as the discount rate. Assume that there are 30 days in a month. Is it a worthwhile project for Keith?,Thank you for the quick response! I will review today.


Paper#2627 | Written in 18-Jul-2015

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