Qulz Chapter 13 Help Save & Exit Submit Check my work 6 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 n the free time he has avalable from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan determined the following: Skipped a. A building in which a car wash could be installed is available under a five-year lease at a cost of $3,400 per month. b, Purchase and installation costs of equipment would total $315,000. In five years the equipment could be sold for about 10% of its c. An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change funds, and d. Both a wash and a vacuum service would be offered. Each customer would pay $1.54 for a wash and $.85 for access to e. 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 f In addition to rent, monthly costs of operation would be: cleaning, $1,900; inurance, $75; and maintenance, $1,675. original cost. so forth. After five years, this working capital would be released for investment elsewhere cleaner. electricity. vacuum g. Gross receipts from the wash would be about $2,002 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vocuum Mr. Duncan will not open the car wash unless it provides at least a 12% return. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factors) 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. Detemine 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? 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. Req 1 Req 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 Auto wash cash receipts Vacuum cash receipts Total cash receipts Less cash disbursements Water Electricity Rent Cleaning Insurance Maintenance Total cash disbursements 0 Annual net cash flow from operations Req 1 Req 2A > Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B 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 KReq 1 Req 2B > Complete this question by entering your answers in the tabs below. Req 2B Req 1 Would you advise Mr. Duncan to open the car wash? OYes Req 2A ONo Req 2A Req 2B EXHIBIT 13B-2 Present Value of an Annuity of $1 in Arrears; (1+1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2.074 2.042 2.011 1.981 1.952 4 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 5 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 6 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 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4968 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 9 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 10 8.111 7.722 7.360 7.024 6.710 6,418 6.145 5.889 5.650 5,426 5.216 5.019 4833 4.659 4,494 4.339 4.192 4.054 3.923 3.799 3.682 3.57 11 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 2 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 3 9.986 9.394 8.853 8.358 7.904 7,487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 4 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5,468 5.229 5.008 4802 4.611 4.432 4.265 4.108 3962 3.824 15 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 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 16 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 4938 4.730 4.536 4.357 4.189 4033 3.887 17 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 18 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 19 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6.550 6198 5.877 5.584 5.316 5.070 4.843 4.635 4442 4.263 4.097 3.942 20 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 21 22 23 24 25 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 .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 26 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 27 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 5.215 4.964 4.734 4.524 4332 4.154 3.990 28 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 29 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 30 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 40 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