Revenue:

Carwashes projected for the next year 37,500

Average revenue per car wash $13.00

Forecasted annual growth in carwashes 3 percent

Expenses:

Variable costs per carwash

Utilities (Elec/gas/water) $0.78

Detergents/chemicals 0.64

Maintenance costs 0.47

Site labor 1.24

Total Variable Costs $3.13

Fixed costs per carwash (Based on 37,500 carwashes)

Salaries $5.60

Insurance 0.44

Operating costs 0.60

Advertising 0.65

Depreciation (current) 0.00**

Total Fixed Costs 7.29

Total $11.22

*No net changes in working capital are expected

**New equipment useful life 10 years with no salvage/disposal value

***Rate of return (discount rate) 8%

Case questions

1. Compute the breakeven carwashes (carwashes & total sales dollars), margin of safety and degree of operating leverage. Assess Kays comments about the current state Crossroads profitability.
2. Assuming the Christians decide to upgrade their equipment, calculate Crossroads net operating income for each of the next ten years. Evaluate the long term viability of Crossroads.
3. Perform a discounted cash flow analysis and clearly recommend if the Christians should accept Megas offer or continue to operate Crossroads.

Note - Please answer the question no 3 in given Excel sheet format. That would be helpful.

Crossroads Forecasted Net Operating Income 2023 2024 2025 2026 2027 2021 2022 2028 2029 2030 Total Carwashes Average Price per Car Wash Sales Variable Costs Utilities Chemicals Maintenance Labor Total Variable Costs Contribution Margin CM Fixed Costs Owners' Salaries Daughter/Son Salary Insurance Operating Costs Advertising Depreciation Total Fixed Costs Total Expenses (Costs) Net Operating Income Discounted Cash Flow Analysis 2023 2024 2025 2026 2020 2021 2022 2027 2028 2029 2030 Cash Inflows (Revenue) Sale of Business Net Cash Inflows Operating Expenses Less Depreciation (Non-cash expense) Equipment Upgrade Net Cash Outflows Net Cash Flows Discount Factors (Present Value of $1.00) Present Value Sell to Mega Cash Today from Big Box Retirement Savings Cash Flow Sell to Mega Fixed Costs (dollars): Owners' salary Daughter's salary Son's salary Insurance Operating costs (cc fees) Advertising Depreciation Total Fixed Costs Breakeven Carwashes Fixed Costs Contribution Margin per Carwash Breakeven Carwashes Breakeven Dollars Breakeven Carwashes Revenue per Carwash Breakeven Dollars Margin of Safety Margin Forecasted Breakevenof Safety Revenue per Carwash Carwashes Total Revenue Degree of Operating Leverage Forecasted Revenue Forecasted Variable Costs Variable Cost per Unit Forecasted Carwashes Forecasted Variable Costs Forecasted Contribution Margin Forecasted Fixed Costs Forecasted Net Operating Income $ Forecasted Contribution Margin Forecasted Net Operating Income Degree of Operating Leverage Crossroads Forecasted Net Operating Income 2023 2024 2025 2026 2027 2021 2022 2028 2029 2030 Total Carwashes Average Price per Car Wash Sales Variable Costs Utilities Chemicals Maintenance Labor Total Variable Costs Contribution Margin CM Fixed Costs Owners' Salaries Daughter/Son Salary Insurance Operating Costs Advertising Depreciation Total Fixed Costs Total Expenses (Costs) Net Operating Income Discounted Cash Flow Analysis 2023 2024 2025 2026 2020 2021 2022 2027 2028 2029 2030 Cash Inflows (Revenue) Sale of Business Net Cash Inflows Operating Expenses Less Depreciation (Non-cash expense) Equipment Upgrade Net Cash Outflows Net Cash Flows Discount Factors (Present Value of $1.00) Present Value Sell to Mega Cash Today from Big Box Retirement Savings Cash Flow Sell to Mega Fixed Costs (dollars): Owners' salary Daughter's salary Son's salary Insurance Operating costs (cc fees) Advertising Depreciation Total Fixed Costs Breakeven Carwashes Fixed Costs Contribution Margin per Carwash Breakeven Carwashes Breakeven Dollars Breakeven Carwashes Revenue per Carwash Breakeven Dollars Margin of Safety Margin Forecasted Breakevenof Safety Revenue per Carwash Carwashes Total Revenue Degree of Operating Leverage Forecasted Revenue Forecasted Variable Costs Variable Cost per Unit Forecasted Carwashes Forecasted Variable Costs Forecasted Contribution Margin Forecasted Fixed Costs Forecasted Net Operating Income $ Forecasted Contribution Margin Forecasted Net Operating Income Degree of Operating Leverage