Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Year 0 Year 1 Year 2 Year 3 Year 4 Revenues Gross Profit Cost of Goods Sold Selling General and Admin 120,000 -60,000 210,000
Year 0 Year 1 Year 2 Year 3 Year 4 Revenues Gross Profit Cost of Goods Sold Selling General and Admin 120,000 -60,000 210,000 60,000 210,000 420,000 420,000 340,000 210,000 170,000 210,000 170,000 -6400 Depreciation -76,000 6400 76,000 EBIT -22,400 127,600 Income tax (20%) Incremental Earnings 4480 -17,920 -25,520 102,080 6400 76,000 127,600 87,600 -25,520 -17,520 102,080 70,080 6400 76,000 Capital Purchases -280,000 Changes to NWC -5,000 -5,000 -5,000 -5,000 A garage is installing a new "bubble-wash" car wash. It will promote the car wash as a fun activity for the family, and it is expected that the novelty of this approach will boost sales in the medium term. If the cost of capital is 10%, what is the net present value (NPV) of this project?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started