Key Topics:
• Relevant and irrelevant costs
• Incremental cash flows
• Present value (PV) of recurring costs
• Project evaluation metrics: IRR, ROCE, and payback period.

Concepts Covered:
• Identifying relevant costs for NPV analysis
• Incremental sales and cost savings calculations
• Present value of maintenance costs
• Interpretation of financial metrics (IRR, ROCE, payback)

Description: The case required evaluating whether Cab Co should implement a computerized taxi tracking system. Tasks involved identifying relevant costs such as the $2.1M investment and excluding irrelevant ones like sunk costs and depreciation. Incremental sales, vehicle cost savings, and the present value of maintenance were calculated to determine the project’s feasibility. Key metrics like the IRR of 14% (exceeding the cost of capital of 10%), ROCE of 20%, and a four-year payback period were used to assess profitability and efficiency.