Spot-Free Car Wash Is Considering a New Project Whose Data

question 25

Multiple Choice

Spot-Free 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 decline? (Hint: Note that cash flows are constant at the Year 1 level, whatever that level is.) $\begin{array}{lr}\text { Project cost of capital (r) } & 10.0 \% \\\text { Net investment cost (depreciable basis) } & \$ 60,000 \\\text { Number of cars washed } & 2,800 \\\text { Average price per car } & \$ 25.00\\\text { Fixed op. cost (excl. deprec) } & \$ 10,000 \\\text { Variable op. costiunit (i.e., VC per car washed) } & \$ 5.375 \\\text { Annual depreciation } & \$ 20,000 \\\text { Tax rate } & 25.0 \%\end{array}$

• A) $33,391
• B) $35,149
• C) $36,999
• D) $38,946
• E) $40,996

Appreciate the significance of law in regulating social order and ensuring predictability in commercial relationships.

Distinguish between case law and statutory law.

Recognize the importance of legal remedies in enforcing rights and maintaining social justice.

Understand the concept and practices of masturbation and sexual self-stimulation across genders.

---

Definitions:

Concurrent Power

Powers in federal systems that are shared by both the state governments and the federal government.

States' Rights

The rights and powers held by individual US states rather than by the federal government, a principle often invoked in debates over federalism and the balance of power.

Civil War

A war between citizens of the same country.

American Federalism

A system of government in which power is divided between a national (federal) government and various state governments.