CAPITAL BUDGETING

Group 9
Vitor, Ivy G.
Torrejos, Jerah Y.
Cagampang, Christiansen M.
 Net Income
Commuter Service Revenue (30 weeks x 10 108,000
round-trips/ week x 6 students x $12 each x 5
vans)
Payroll Expense 48,000
Gasoline 16,000
Maintenance 3,300
Repairs 4,000
Insurance 4,200
Advertising 2,500
Depreciation (75,000/ 3) 25,000 (103,000)
NET INCOME 5,000
 Net Annual Cash Flow
Net Income 5,000
Add: Depreciation 25,000
ANNUAL CASH FLOW 30,000
 Payback Period

= Initial Investment/ Cash Flow

= 75,000/ 30,000

= 2.5 years
 Annual Rate of Return

= Net Income/ Initial Investment

=5,000/ 75,000

= 6.67 %
 Net Present Value

= PV of Cash Flow- Investment

= 68,496- 75,000

• (30,000 x 2.2832= 68,496), Cost of Capital is 15%.

= (6,504)