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Michael Zamarripa Problem 13-24

# Michael Zamarripa Problem 13-24 - \$200,000 1.000(200,000...

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Student Name: Michael Zamarripa Class: BUS630 Problem 13-24 KENT DUNCAN - CAR WASH Requirement 1: Net annual cash flows Average weekly use of car wash and vacuums: Gross Per use Uses Car wash 1,350 2.00 675 Vacuums 405 1.00 405 Expected net annual cash flow from opera Car Wash \$70,200 Vacums 21,060 Total cash receipts 91,260 Less cash disbursements Lease \$20,400 Cleaning 5,400 Insurance 900 Maintennce 6,000 Water 7,020 Electricity 2,106 Total cash disbursements 41,826 Annual net cash flow from operations \$49,434 Correct! Requirement 2: Net Present Value of New Machine Amount of 10% PV of Item Year(s) Cash Flows Factor Cash Flows Annual Net Cash Flow 1 to 8 \$49,434 5.335 \$263,730 Cost of New Equipment Now

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Unformatted text preview: \$200,000 1.000 (200,000) Working Capital Now \$2,000 1.000 (2,000) Salvage of Equipment 8 \$20,000 0.467 9,340 Working Capital Released 8 \$2,000 0.467 934 Net present value \$72,004 Correct! Given Data P13-24: KENT DUNCAN Cost of equipment \$200,000 Required working capital \$2,000 Charge per use for car wash \$2 Charge per use for vacuum \$1 Expected weekly gross for car wash \$1,350 Expected weekly gross for vacuum \$810 Variable cost per use for car wash \$0.20 Variable cost per use for vacuum \$0.10 Fixed costs: Building lease \$1,700 Cleaning \$450 Insurance \$75 Maintenance \$500 Disposal value in 8 years 10% Required rate of return 10%...
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