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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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