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 has determined the following . A building in which a car wash could be installed is available under a five-year lease at a cost of $3,900 per month Purchase and Installation costs of equipment would total $162,000. In five years the equipment could be sold for about 7% of its original cost An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change tunds. and so forth. After five years, this working capital would be released for investment elsewhere Both a wash and a vacuum service would be offered with a wash costing $136 and the vacuum costing 5065 per use The only variable costs associated with the operation would be 75 cents per wash for water and 10 cents per use of the vacuum for electricity In addition to rent monthly costs of operation would be cleaning. $2.400 Insurance $55; and maintenance. $1,825 Gross receipts from the wash would be about $2,448 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 6% return Required: 1. Assuming that the car wash will be open 52 weeks a year. compute the expected annual net cash receipts from as operation 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 2-a. Determine the net present value using the net present value method of investment analysis. (Any cash outflows should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to the nearest dollar amount.) Year(s) Amount of Cash Flows Present Value of Cash Flows Now Cost of the equipment Working capital Net annual cash inflows Working capital release Salvage value Net present value Now 1-5 5 5 s 0 2-b. Would you advise Mr. Duncan to open the car wash? O Yes ONo