The Tracey Company is thinking of opening a small laundromat. Here is the information

needed to make a decision about this investment:

All yellow cells must be a formula or cell reference in order to get full credit.

Cost of equipment

$194,000

washers, dryers, and other equipment

Required working capital

$6,000

soap, etc. Will be released at end of Yr 6

Charge per use for washers

$1.50

per USE

Charge per use for dryers

$0.75

per USE

Expected weekly gross for washers

$1,800

per WEEK

Expected weekly gross for dryers

$1,125

per WEEK

Variable cost per use for washers

$0.075

per USE for water and electricity

Variable cost per use for dryers

$0.09

per USE for gas and electricity

Fixed costs PER MONTH:

Building rent

$3,000

per MONTH

Cleaning

$1,500

per MONTH

Maintenance, insurance, other

$1,875

per MONTH

Salvage value of equipment in 6 years

10%

Required rate of return

12%

Weeks per year the laundromat is open

52

Required:

(1) Assuming the laundromat would be open 52 weeks a year, compute the expected

annual net cash receipts from its operations (gross cash receipts less cash disbursements).

Average WEEKLY use of washers and dryers:

Gross

Per Use

# of Uses

Washers

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Gross

Per Use

# of Uses

Dryers

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Expected net annual cash receipts:

Washer cash receipts

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Dryer cash receipts

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Total cash receipts

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Less cash disbursements

Washer: water & electricity

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Dryer: gas & electricity

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Rent

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Cleaning

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Maintenance and other

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Total cash disbursements

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Annual net cash receipts

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(2) Compute the NPV for this investment. Remember, cash inflows are shown as positive

numbers and cash outflows are shown as negataive numbers. I did the formulas in Column G

for you but you should go and look at them. (The =ROUND() function will round an answer to

the number of decimal places specified after the comma. In this case it is zero.)

Item

Year(s)

Amount of Cash Flows

12% Factor

PV of Cash Flows

Cost of the equipment

Now

1.000

$0

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Working capital needed

Now

1.000

$0

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Annual net cash receipts

1-6

4.111

$0

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Salvage value of equipment

6

0.507

$0

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Working capital released

6

0.507

$0

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Net Present Value

$0

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A1 Tracey Excel The Tracey Company is thinking of opening a small laundromat. Here is the information needed to make a decision about this investment: All yellow cells must be a formula or cell reference in order to get full credit. Cost of equipment Required working capital Charge per use for washers Charge per use for dryers 194,000 washers, dryers, and other equipment $6,000 soap, etc. Will be released at end of Yr6 $1.50 per USE $0.75 10 $1,800 $1,125 $0.075 per USE per WEEK per WEEK per USE for water and electricity per USE for gas and electricity 12 pected weekly gross for washers Expected weekly gross for dryers Variable cost per use for washers Variable cost per use for dryers 13 $0.09 15 16 17 18 19 20 Fixed costs PER MONTH: Building rent Cleaning Maintenance, insurance, other $3,000 per MONTH $1,500 per MONTH $1,875 per MONTH Salvage value of equipment in 6 years Required rate of return Weeks per year the laundromat is open 10% 12% 52 23 24 Required (1) Assuming the laundromat would be open 52 weeks a year, compute the expected Sheet1