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Answer the following questions using the attached spreadsheet:

1. For any of the years (i.e. total for the year), what is the:

a. Gross Margin $ (5 pts)

b. Gross Margin % (5 pts)

c. EBITDA $ (5 pts)

d. Operating Income $ (5 pts)

e. Net Income $ (5 pts)

2. A few customers have contacted you and said that if you lowered your prices, they would get their cars washed more often. You have done some quick market research and estimated that if you lower your prices by $2.00 on each service your monthly demand would increase by 25% for each of the services. What is the impact (i.e. total increase or decrease) of doing this on:

a. Cumulative 3 year Gross Margin $ (5 points)

b. Cumulative 3 year Net Income $ (5 points)

c. Should you make the changes? Why or why not? (10 points)

3. Your only local competitor has approached you and made you an offer they want to retire and move to Florida. They have tried to sell their car wash, but the equipment is older and there are not any serious buyers. Their offer if you pay them a flat fee of $35,000 per year for the next three years they will exit the market. Based on having market share dominance, you project that your average customers per hour will increase from 2 to 4 (with the same service sales mix) without a reduction in price. Should you accept the deal? Why or why not? (15 points)

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