Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help with questions 17-22! thank you Capital Budgeting Computations Part Two (20 points) MOST You want to examine building out a new business: Holy

please help with questions 17-22! thank you image text in transcribed
Capital Budgeting Computations Part Two (20 points) MOST You want to examine building out a new business: Holy Water Car Wash DIFFICULT You first need to buy and improve the land. The land will cost $100,000, but it needs sewer and electric set up ($50,000) plus needs to be leveled and covered in asphalt (525,000). Then, you need to install the washing equipment, which isn't cheap: It will cost $200,000. It will process a maximum of 12,000 cars per year. You will depreciate this new equipment straight-line over 10 years to zero You forecast that the number of washes sold in Year 1 would be 7,500, and that number would Increase 20% per year (until it reaches maximum machine capacity). You will sell washes at $10 each, every year. HOLY WATER Variable Expenses of the business are the per-wash costs of soap ($1 per wash), electricity ($1 per CAR WASH wash), and water ($1 per wash). sur des tubes Borer for ( Fixed Expenses of the business are the two wash attendants who each make $20,000 per year in salary & benefits. Plus, Insurance ($5,000) and basic utilities ($5,000). You want to model out for 5 years. Your tax rate is 35%. You have other businesses, so if you have a loss in any year, you will have the benefit of any tax credits In Years, you will sell the car wash and the sale price will be 5 times Year 5 Net Sales Revenue. Item Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 EBIT Free Cash Flow 17 18 19 20 Question 21 22

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance And Public Policy

Authors: Jonathan Gruber

2nd Edition

0716766310, 9780716766315

More Books

Students also viewed these Finance questions