In five years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan determined the following: a. A building in which a car wash could be installed is available under a five-year lease at a cost of $3,600 per month. b. Purchase and installation costs of equipment would total $200,000. In five years the equipment could be sold for about 10% of its C. An investment of an additional $5,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere. d. Both a wash and a vacuum service would be offered. Each customer would pay $1.51 for a wash and $.81 for access to a vacuum cleaner e. The only variable costs associated with the operation would be 7.5 cents per wash for water and 10 cents per use of the vacuum for electricity f. In addition to rent, monthly costs of operation would be cleaning, $2,100; insurance, $175; and maintenance, $1,675. g. Gross receipts from the wash would be about $2,265 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vacuum. Mr. Duncan will not open the car wash unless it provides at least a 14% return. Click here to view Exhibit 13B-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using tables. Required: 1. Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts from its operation. 2-a. Determine the net present value using the net present value method of investment analysis. 2-b. Would you advise Mr. Duncan to open the car wash? Complete this question by entering your answers in the tabs below. EXHIBIT 1 - Present Value of $t: Periods 4% 5 6% 789 10 11 12 13 R, 15 16, 171, 16 20, 11, 22 23 74 25 0.962 0.952 0.943 0.35 00 0,517 909 0.91 0.893 0.8B5 0.87 0 870 0,862 0.855 0,847 0 80 0,833 0.826 0,820 0.313 0.806 0,800 ? 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0,743 0.731 0.718_o.706 0,694 0.683 0.672 0.661 0.650 0.640 3 .88,864 0.840 0.816 0.794 0.772 0.751 0.731 0.72 0.693 0.675 0.6580,641 0.624 0.629 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0.792 0.763 0.735 0.7OB 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0,482 0,467 0.451 0,437 0,423 0,410 5 0.822 0.784 0,747 0.73 0.681 0.650 0.621 0.593 0.567 0.543 0.590,497 0,476 0.456 0,437 0.419 0,402 0.386 0.370 0.355 0.34 1 0.328 6 0.790 074 0,705 0,660,039 096 0.64 0,535 0507 0.480 0,456 0,432 0,4 10 0.300 0,370 0.352 0.335 0.319 0.303 0.289 0.2 0.262 7 0,760 071 0,665 0623 0,583 054 7 0.513 0,482 0.452 0.425 0.400 0.376 0,34 0.33 0,314 0.296 0.29 0.263 0.29 0.235 0.222 020 E 0.731 677 0,627 0,582 0,540 6,502 0,467 0,4 34 0,404 0.376 0.351 0,31/ 0,306 285 0.266 249 0 233 011 .204 0, 11 0.17 0168 0.703 0.645 0,592 544 05 , 46 0.424 0.391 0.361 0.333 0.308 0.284 0,263 243 0.225 209 0, 194 0,180 0,167 0,155 0, 144 0,134 0 .66 0.614 0,558 0.508 0,463 , 422 .386 0.352 0.322 0.295 270 0.247 02 208 0, 11 , 176 0, 162 0.149 0.137 0,126 0 1 0,107 1 0.650 0,585 0,527 ,475 426,388 0.35 0.37 0.287 061 257 115 0.195 0.178 , 162 . 148 0, 135 0 23 0.112 , 03 04 0.086 12 0.625 0,570,497 ,444 0.37 6,356 0.35 286 0,257 023 208 . 7 0.168.152 0, 137 . 124 0, 12 0 102 0002 ,083 0,076 0.069 13 0.601 0,530 0.469 ,150,368 6,326 0,290 02580,229 0 04 , I82 , 0,145 0.130 0,116 0.104 0.003 008 007 0,068 0,061 0.055 14 0.577 0.5O50,442 0,388 o, 30 0 299 0. 23 0.232 0.205 0.181 , 160 , 11 0,125 0.111 0.099 0.088 0.078 0 069 0.002 0,055 0.049 0.044 15 .555 0,481 417 0,362 0.315 0.275 235 0 0 0 1 B3 160 d. 140 0.123 0.108 005 0 04 07 0.065 0.057 0.05 0,045 0.040 0035 16 0.534 0.458 0.304 0.339 0.292 0.252 0.218 0,1 88 0.163 0, 1 4 1 0,123 0,101 0.03 0.081 0.071 0.062 0,054 0,047 0,042 0,036 0.032 0028 17 0,513 0.430 0,371 0,317 070 231 0.198 0.170 10 , 120,108 0.093 0.00 .069 0, 062 45 0.039 0,034 0,030 002 0023 18 0,494 0,416 0,3 0.296 0.20 0.212 0.180 0.153 130 , 111 0.095 0.081 0.069 .059 0,065 1 0.044 0038 0.032 0,028 0,02 002 0018 19 0,475 0.396 0.33 0277 0.232 0.194 0.164 0.138 0,116 0.008 0,083 0.070 0.060 0.051 0,045 0.037 0,031 0,027 0.023 0.020 0017 0014 20 0.456 0.37 0,32 268 01 0.178 0 490,124 . 10 0,087 0.073 0 061 51 0,043 00370,031 002 0022 00 00 0014 0012 11. 0.439 0.35 0 04 0.22 0.99 0.164 0.35 0 12 003 ,077 0.064 0 053 04 0,0370,031 0,026 0022 00 005 0.013 011 000 12 0,422 0.342 0.278 0.226 0.184 0.15 0.23 0,101 063 0,068 0,056 004 0.038 0.032 0026 0,022 008 001 0.013 0,011 0009 007 13 0.406 0.326 0.202 0.111 0.170 0,138 0.112 01 07 0,060 .04 0.040 0,033 6,027 0.022 0,018 005 0012 ,010 0.000 0.007 0006 14 0.390 0.10 0,247 0,197 0.158 0,126 0.102 082 0.066 0.053 6,043 ,035 0,028 0023 0.019 0,015 003 000 0.008 0.007 0006 0005 25 0.375 206 0.333 0.1BA 0.146 0.1 16 002 04 59 0.047 38 0030 ,024 00 0,016 0.013 000 000 0007 0006 005 0004 16 0.31 0.281 070 0.171 0.135 . 106,084 066 .053 002 01 0260,021 0.017 0.014 0,01 000 0007 0 606 0005 0004 0003 17 0347 0 20 0 207 0 161 0,125 08 076 60 .047 0.037 020 ,023 66 014 0.01 1 000 0007 0.0060 OD5 0004 0003 0002 28 0 333 02 0 10 0.150 0,116 0 00 0,04 54 0,042 0 033 002 002 16 01 0,01 COB 0006 0005 0.004 0003 0002 0002 23 0 321 0 243 0 185 0,141 0.107 002 03 00 0.037 0020 022 0017 04 0.011 0.008 0006 0005 0.004 0.003 0002 0002 0002 0 308 073 04 0, 13 0 03 007 0,067 44 0.033 002 0020 0,015 0.012 0,000,007 0.CXO5 0.004 0003 0003 0002 0002 000 40 0 208 0 42 007 0007 0.046 0,032 0022 005 0,01 1 0 60H 000 0.004 003 0.002 0,01 0,01 0.0 0.000 0.000 0.000 0.000 000 EXHIBIT 13B-2 Present Value of an Annuity of $1 in Arrears - Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 2.775 2.723 2.673 2.624 2.577 2531 2.487 2.444 2402 2.361 2.322 2283 2246 2.210 2.174 2.140 2.106 2.074 2.042 2.011 1.981 1952 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2.494 2.448 2.404 2.362 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2.951 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 8.111 7.722 7.360 7024 6710 6.418 6.145 5.889 5.650 5.426 5 216 5.019 4,833 4.659 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 3.776 3.656 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4.127 3.985 3.851 3.725 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6,628 6.302 6.002 5724 5.468 5.229 5.008 4.802 4.611 4.432 4265 4.108 3.962 3.824 11.118 10.380 9.712 9.108 8.559 8.061 7606 7.191 6811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 4.153 4,001 3.859 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 12.166 11.274 10.477 9.763 9.122 8,544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5818 5.534 5.273 5.033 4.812 4,608 4.419 4.243 4.080 3.928 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 4.263 4,097 3.942 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4.121 3.963 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6 359 6 011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 6.792 6.399 6,044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 15 247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.147 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5215 4.964 4.734 4.524 4.332 4.154 3.990 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7.470 6.983 6.551 6.166 5.820 5.510 5.229 4.975 4.743 4.531 4.337 4.159 3.994 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4,339 4.160 3.995 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6,642 6.233 5.871 5.548 5.258 4.997 4.760 4,544 4.347 4.166 3.999 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts from its operation. 0 Auto wash cash receipts Vacuum cash receipts Total cash receipts Less cash disbursements: Water Electricity Rent Cleaning Insurance Maintenance Total cash disbursements Annual net cash flow from operations 0 $ 0 Req 1 Req 2A > Required: 1. Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts from its operation 2-a. Determine the net present value using the net present value method of investment analysis. 2-b. Would you advise Mr. Duncan to open the car wash? Complete this question by entering your answers in the tabs below. Req1 Reg 2A Reg 28 Determine the net present value using the net present value method of investment analysis. (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) Net present value