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Transcription of this question: 2.Nha Trang Bicycles (NTB)Chinh Pham Offers daily rentals Of bicycles at the seaside resort Of Nha Trang in Vietnam. Heoperates as a sole trader under the name Nha Trang Bicycles (NTB). The business rents mostlyto young tourists, who enjoy riding bicycles on the roads that run alongside the beautiful beaches.Many Other businesses in the area also Offer bicycle rental. Because Of the intense competition, theprice of renting a bicycle is low.In addition to offering bicycle rental, NTB is considering two options:• Option l: Offer motorcycle rental. Total initial cost to purchase 10 motorcycles: $120000.• Option 2: Offer car rental. Total initial cost to purchase 5 cars: Sl 10000.The following shows the expected total net income from both options (all figures in SOOOS):Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Option 1Option 2402740354035403540354035The motorcycles would typically be rented by young tourists on a daily basis. The cars would berented for longer periods (one week on average) by Older customers with families. Chinh has noexperience with this market segment. A concern for Chinh is the impact that the increased scale Ofoperation will have on his ability to manage the business. A local pressure group argues that carswill harm the environment. Another concern is that motorcycles are very noisy and would disturb thequiet, peaceful feel of the seaside resort.(a)(b)(c)(d)Describe two appropriate sources Of finance for NTB5 cars (Option 2).(i) Calculate for Option 1 , the payback period and thereturn (ARR) (show all your working).(ii) Calculate for Option 2, the payback period and theto acquire the[4 marks]average rate Of[4 marks]average rate Ofreturn (ARR) (show all your working).Comment on your results to partAnalyse whether NTB should purchase the5 cars (Option 2).10 motorcycles (Option[4 marks][3 marks]1) or the[5 marks]

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