Answer:
b. $35,149
Explanation:
3nvestment cost −$60,000
Cars washed Declines by: 40% 1,6801, 6801, 680
Price per car $25.00 $25.00 $25.00
Variable cost/unit $5.375$ 5.375 $5.375
Sales revenues $42,000
$42,000$42,000−
Fixed op. cost (excl. deprec.) 10,000 10,000 10,000−
Variable op costs 9,030 9,030 9,030−
Depreciation 20,000
20,000 20,000
Operating income (EBIT)$ 2,970$
2,970$ 2,970−
Taxes. 1,040 1,040. 1,040
After-tax EBIT $1,931 $1,931 $1,931+ Depreciation 20,000 20,000 20,000 Cash flow−$60,000$21,931 $21,931$21,931
Decline in NPV $35,149
