MGMT 4120 What is current ROIC

| June 14, 2018

OPIM Bus Inc offers low-cost bus transportation between Philly and Bryn Mawr. the invested capital is $500,000, corresponding to the investment in the two vehicles it owns. each of the two buses can carry 50 passengers. each bus does 12 daily trips from Philly to Bryn Mawr and 12 from Bryn Mawr to Philly. The price is $10 for each one-way ticket. the current load factor is 70 percent. the annual cost of operating the service and running the business is $6 million. the company operated 365 days a year.What is current ROIC?What is the minimum load factor at which the company breaks even?What load factor would the company have to achieve so that it obtained a 10 percentage-point increase in the ROIC (eg. an ROIC in creasing from 5 percent to 15 percent)?

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