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Kent Duncan is exploring the possibility of opening a self-service car wash and operating it for the next five years until he retires. Ho has gathored the following information: a. A bul ding in which a car wash could be installed is avallable unce: a five.year leese at a cost of $4.500 per month b. Purchese and instaliation costs of equipment wound total $300,000. In flve years the equipment could be sold for about 5% of its original cost C. An investment of an add tional $4,000 wou o be reculred to cover working cepital needs for cleaning supplies, change funds, and so forth. After flve yoars, this working capital would be released for investment elsewhere, d. Both a wash and a vacuum service would be offered. Each customer would pay $1.52 for a wash and $65 for access to a vacuum cloaner. e. The only variable costs assoclated with the operotion wod d be 7.5 cents per wash for water and 10 conts per use of the vacuum for glectricity. Ci.in addition to rent, monthly costs of operation would be: ceaning, \$1,700;insurance, \$175; and maintenance, $1,635, 9. Gross recelprs from the wast woul dbe about $1,672 per weok. According to the exporlence of other car washes, 60 sh of the customers ushng the wash would also use the vecuim. Mr. Duncan wil not open the car wosh unless it provides at least a 6% roturn Click here to view Exhible 14B-1 and Exhlble 148-2, to determine the oppropriato discount fector(s) using tables. Required: 1. Assuming that the cat. wash will bo open 52 weoks o year, compute the oxpected annial net cosh recelpts from its ope radon. 2.0 What is the not present value of the lewestment in the canwash? 2.b. Wou d you edvise Mr. Duncan to open the car wash? Complate this question by entering your answers in the tabr below. Kent Duncan is exploring the possibility of opening a self-service car washi and operating is for the next fveyears unt the reiles. Hey has gathered the following information: a. A bulloling in which a car wash could be installed is aval able undeca fve.yeariease at cost or $4,500 per month. b. Purchase and instalation costs of equipment would total $300,000, in flve years the equipment copid be solo for about 58 of its orighal cost c. An investment of an add tonal $4,000 wou d be recuired to cover werking cepital needs for cleaning suppliesiciange funds, and so forth. After flye years, this working capitol would be reseased for invesiment elsowhere. d. Both a wash and a vacuum service would be offered. Each customer would pay $1.52 for a wash and $65 for access to o vacuum cleaner. e. The only var lable costs assoclayed with the operotion would be 7.5 cents per wosh for water and 10 cents per use of the vacuum for eloctricity. 9. Gross recelpts from the wash would be about $1672 por week. According to the axperience of other car washios, 608 of the customers ushg the wash would also use the vocuum. Mi. Duncan wil not open the cor wosh unless it provides at least a 68 roturn Click here to vew Exhibjt 4884 and Exhib ti48-2 to determine the opproprlate discount foctoris using tobles. Requiredi 1. Assuming that the cor wash wi be open 52 weeks a yeor, compute the expected annusi net cosh rece pts from is operetion. 2.0. Wha is the not present volue of the investment in the car wash? 2.6. Would you advise Mr. Duncan to open the car wesh?? Complate thil question by entering your answers in the tabs balow. Kent Duncan is exploring the possiblity of opening a self-service car wesh and opecating th for the next fve years unti he relices. He has gathered the following information: a. A buliding in which a car wash could be installed is aval lable under a live-year lease ot a cost of $4,500 per month. b. Purchase and instal atlon costs of equipment wou d total $300,000 tn fye years tho equipment could be sold for about 5% of its: osiginal cost 6. An investment of an additional $4,000 woulo be required to cover working cepitel neecs for cleaning suppl es, change funds, and so forth. After five years, this working capitel would be released for lovestment elsewhere. ci. Both a wash and a vacuum service would be offered. Eoch customer would pay $1.52 for a wash and $.65 for access to a vocuum. cleaner. e. The only varlable costs assoclated with the operation would be 75 cents per wash for water and 10 cents per use of the vacuim for glectricity. f. Iit adcition to rent, monthly costs of operation would be: cleaning, $1,700; insurence, $175; and maintenanco, $1,635. 9. Gross recelpts from the wash would be about $1,672 per week. According to the experience of other cot washes, 60% of the customers using the wash would also use the vacuum. Mr. Duocan will not open the car wash unless in provides at least a 6% return. Click here 10 viow Exhbliv48-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using tables. Requlred: 1. Assuming that the cor wash will bo open 52 weeks a year, compute the oxpected annual net cosh recelpts from its operation. 2-a What is the net present value of the inwestmentin the car wash? 2-b. Wou d you advise Mc. Duncan to open the car wash? Complate this question by entering your answers in the tabs belowi. Wood you edvisa Mri Duncen to open tha cariwash

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