Reference no: EM13970764
Florida Car Wash is considering a new project whose data are shown below. The equipment to be used has a 3-year tax life, would be depreciated on a straight-line basis over the project's 3-year life, and would have a zero salvage value after Year 3. No new working capital would be required. Revenues and other operating costs will be constant over the project's life, and this is just one of the firm's many projects, so any losses on it can be used to offset profits in other units. If the number of cars washed declined by 40% from the expected level, by how much would the project's NPV change? (Hint: Note that cash flows are constant at the Year 1 level, whatever that level is.)
WACC 10.0%
Net investment cost (depreciable basis) $60,000
Number of cars washed 2,770
Average price per car $25.00
Fixed op. cost (excl. depr.) $10,000
Variable op. cost/unit (i.e., VC per car washed) $5.375
Annual depreciation $20,000
Tax rate 35.0%
A) -$35,149
B) -$39,367
C) -$28,822
D) -$36,203
E) -$34,446
|
Home equity line of credit-what is after-tax interest rate
: A home equity line of credit (HELOC) is, loosely speaking, like a credit card for your home. You can borrow money by drawing down on the line of credit. But, because the borrowed money is for the purpose of your home, the interest is tax-deductible m..
|
|
Expected net present value
: The Z-90 project being considered by Steppingstone Inc. (SI) has an up-front cost of $250,000. The project's subsequent cash flows are critically dependent on whether another of its products, Z-45, becomes an industry standard. what is the Z-90's exp..
|
|
Used to discount a projects expected cash flows
: Real options change the size, but not the risk, of projects' expected NPVs. Real options change the risk, but not the size, of projects' expected NPVs. Real options can reduce the cost of capital that should be used to discount a project's expected c..
|
|
Considering a project that has an up-front cost
: The executives of Garner-Wagner Inc. are considering a project that has an up-front cost of $3 million and is expected to produce a cash flow of $500,000 at the end of each of the next 5 years. The project's cost of capital is 10%. Based on the above..
|
|
How much would the projects NPV change
: Florida Car Wash is considering a new project whose data are shown below. The equipment to be used has a 3-year tax life, would be depreciated on a straight-line basis over the project's 3-year life, and would have a zero salvage value after Year 3. ..
|
|
Reduce its dollar investment in working capital
: If the firm could reduce the average age of its inventory from 73 days, to 63 day, by how much would it reduce its dollar investment in working capital?
|
|
Off-label marketing in the pharmaceutical industry
: I need a 5 page research paper on the subject of "Off-Label Marketing in the Pharmaceutical Industry". I need it with a minimum of 10 references in APA format.
|
|
Traditional companies in developing online sales capability
: Describe some of the reasons that early dot-com companies had an initial advantage over traditional companies in developing an online sales capability?
|
|
Residents are covered by non-private pay payors
: The owner of Shady Rest Nursing Home insists that the facility earn $80,000 in annual profits. How much must the administrator raise the per day charge for the privately insured residents if 25 percent of the residents are covered by non-private pay ..
|