Tasmanian Motor Rental (TMR) is set up as a proprietary company in car rental industry and is considering whether to enter the discount ren tal car...

30/6/2024

Revenue ($ '000)

850

1,050

1,100

1,250

1,250

Operating variable costs associated with the new business repre

sent 10% of revenue. Annual operating fixed

costs (excluding depreciation) a

re $1,800 per vehicle. Existing

administrative costs are $550,000 per annum.

As a result of the new operati

on, these administrative costs wi

ll increase by 20%. The company is subject to

a tax rate of 27.5%

on its profits.

.