$\mathrm{ Calculate\; the\; after<math><mrow><mo\; id="\backslash "EditorElement\_568685\backslash ""><font><font></font></font></mo></mrow></math><br>}<math><mrow><mn>tax\; net\; cash\; flows\; if\; they\; sold\; today</mn></mrow></math>$. Write a paragraph to identify and discuss the Cristos$$key issue$\mathrm{<font><font>(</font></font>}$s$\mathrm{<font><font>)</font></font>}<font><font>.</font></font>$

$\mathrm{<font><font>2</font></font>}<font><font>.</font></font>$Compute the breakeven carwashes$\mathrm{<font><font>(</font></font>}$dollars & carwashes$\mathrm{<font><font>)</font></font>}$and margin of safety and degree of operating leverage under the following scenarios:

a$<font><font>.</font></font>$ If they decide not to upgrade

b$<font><font>.</font></font>$ If they decide to upgrade

$\mathrm{<font><font>3</font></font>}<font><font>.</font></font>$ Assuming the Cristos decide to upgrade their equipment, using a contribution margin format income statement, forecast after$<font><font>-</font></font>$tax net income for each of the next ten years after the upgrade.

Part $\mathrm{<font><font>2</font></font>}$:

$\mathrm{<font><font>4</font></font>}<font><font>.</font></font>$ Calculate the net present value of after$<font><font>-</font></font>$tax cash flows if the Cristos upgrade their equipment and sell after $\mathrm{<font><font>1</font></font>}\mathrm{<font><font>0</font></font>}$ years.

Revenue:

Average revenue per car wash $

Forecasted annual volume growth in carwashespercent

Expenses:

Current variable costs per carwash

UtilitiesElecgaswater $

Detergentschemicals

Maintenance costs

Site labor

Total Variable Costs $

Fixed costs per carwashBased oncarwashes

Salaries $

Insurance

Operating costs

Advertising

Depreciationcurrent

Total Fixed Costs

Total $

No net changes in working capital are expected

New equipment useful lifeyears with no salvagedisposal valuestraightline

Rate of returndiscount rate

InvestmentTax Information

Interest Rate

Equipment Investment $

Net book value if sold today $

Net book value if sold inyears $

Useful LifeYears

Salvage Value $

Maintenance Cost Decrease Per Car Wash $

Long Term Capital Gains Tax Rate

Corporate Income Tax Rate

Case questions

Part:

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