A company is considering supplying employees with company cars. Employee
travel is expected to be a total of 30,000 miles per year for all employees.
Supplying employees with company cars would involve the following cost
components:
Car purchase: $22,000 with an estimated 3-year life
Salvage value: $5000
Insurance cost: $1000/year
Operating and maintenance expenses: $0.22 per mile
The company uses a MARR of 10%. The total cost per mile of providing
company cars to employees is: $per mile.
The company pays employees $0.40 per mile to use their own car. Compare
this with the number you calculated. The company should provide cars to its
employees?