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Author Question: Rocky Top Car Wash is considering a new project whose data are shown below. The equipment that would ... (Read 20 times)

bryantpr01

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on: Aug 7, 2023
Rocky Top Car Wash is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over the project’s 3-year life, and would have zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project’s 3-year life. This is just one project for the firm, so any losses can be used to offset gains on other firm projects. If the number of cars washed declined by 50% from the expected level, by how much would the project’s NPV change? (Hint: Cash flows are constant in Years 1 to 3.)

​

WACC

10%

Net capital investment cost

$75,000

Number of cars washed

3,400

Average price per car

$30

Fixed cash operating cost

$11,000

Variable op. cost/unit (i.e., per car washed)

$5.294

Annual capital cost allowance

$25,000

Tax rate

35%

​


◦

$65,423


◦

$66,119


◦

$67,891


◦

$68,453

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by bryantpr01 on Aug 7, 2023

Spike8502

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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bryantpr01

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Reply 2 on: Aug 7, 2023
Excellent

CAPTAINAMERICA

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Reply 3 on: Yesterday
:D TYSM

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