Answer:
1. $4,240
2. $29,540
Explanation:
The computation is shown below:
1. For net income
Revenue ($11.95 × 6 students × 10 rounds × 30 weeks × 5 vans) $107,550
Less expenses
Depreciation ($75,900 ÷ 3 years) ($25,300)
Payroll expense ($48,010)
Gasoline expense ($16,000)
Maintenance expense ($3,310)
Repaired expense ($4,000)
Insurance expense ($4,200)
Advertisement expense ($2,490)
Net income $4,240
2. For Net annual cash flows
Net income $4,240
Add: Depreciation expense $25,300
Net annual cash flows $29,540
In the net income we deduct the all expenses from the revenues so that the net income could come and for net annual cash flows we added the depreciation expense to the net income
