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Car Wash Firm Inputs: Equipment has a 3-year tax life (depreciated on a straight-line basis over the project's 3-year life). Assume 0 salvage value. No
Car Wash Firm Inputs:
Equipment has a 3-year tax life (depreciated on a straight-line basis over the project's 3-year life). Assume 0 salvage value.
No change in Net Operating Working Capital (NOWC)
Revenues & Other Operating Costs will be constant
Assume a decline of 40% from the expected level of the number of cars washed
WACC | 10% |
Net Investment Cost (Depreciable Basis) | $60,000 |
# Cars Washed | 2,800 |
Average price per car | $25 |
Fixed operating costs (excluding depreciation) | $10,000 |
Variable operating cost/unit (i.e., VC per car washed) | $5.375 |
Annual depreciation | $20,000 |
Tax rate | 35% |
Calculate by how much would the project's NPV change. (Please express your answer in the nearest whole number i.e., 123,456)
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