A small businessman planes to start a taxi -service and purchased a new car for #36000 with borrowed money at 15% compounded annually , his net income is $12000 per year and the salvage value of the car at the end of 4 years is $5000.
The owner spent $2000 for major transmission work in year 2.
1. Using present worth analysis, is this a visable business?
2. What is the approximate rate of return?