Question

P. 1-8 Capital acquisition decisions may be far more complex in not-for-profit organizations than in businesses. The Chicago Youth Association (CYA) and the Palmer Athletic Club (PAC) are each considering purchasing a van. The CYA is a not-for-profit organization serving at-risk inner-city youth. It operates a center that provides after-school tutoring, counseling, and supervised athletic activities. It would use the van mainly to drive students from their schools to the center and from the center back to their homes. The CYA estimates that the van would enable it to increase by 20 the number of students it serves at any one time. The CYA is supported entirely by contributions from the United Way and other private sources. The PAC is a private, for-profit, athletic facility serving the youth of a suburban community. It provides access to athletic facilities and instruction in several sports, including swimming, tennis, and gymnastics. It would use the van for the same purpose as the CYA-to transport students to and from the facility. The PAC estimates that the van would enable it to increase center capacity by 20 customers, each of whom pays weekly fees of $65.

Answer 1

PAC Cash inflors Gt PVF @ PVF OIL Depreciation 1094 - PAC 25000 0.909 22,725 25000 0.826 20,650 25000 0.751 18,775 e Besent value cash linflows = 62,150 Psest value g cashoulflows a 30,000 Carpb). Met present value - 32,1500 Working notes @ 658 - 508 15 4 x 50 weeks & 20 customers Cosh Pinglosa 15000 $ per annum O Depdedelion 30,000 s 10,000 3 years = 15000 710000 - 25000. the Conclusion. As CS Scanned with Parc CamScanner the con app is positive acquise_thevan.

② CYA can also acquire the ran I they also get the funds upto break even point, as CYA is a non prejftolcanization. se The funds covering the deprecation and cost a serling @ so $ pes client per week @ so weeks. PAC as a profit organisation con acquire the van so that it can increase its profit. But, cya as a Non projet organisation, even though if they don't any profits they can bacauire the rant, as they want to service. Further, Capital budgeting in business is the important factor to take decisions. But jos Not -jos-peost organisations, it is less crutial gol decision making Scanned with CamScanner