Question: Flotida Car Wash is considering a new project whose data are chown below. The equipanent to be used has a 3 -year tax life. Under

 Flotida Car Wash is considering a new project whose data are

Flotida Car Wash is considering a new project whose data are chown below. The equipanent to be used has a 3 -year tax life. Under the new tax law, the equipment is eligible for 100 / bonus depreciation, so it will be fully depreciated at t=0. At the end of the projectr 3 -ytar life, it would have xero salvage value. No change in net operating working capital (NOWC) woald be required for the project. Revenues and operating costs will be constant over the project's life, and this is juat one of the firm't many projects, 10 any losses on it can be used to offset profits in other units. If the number of cars washed declined by 400 . from the expected level, by how much would the project's NpV change? (Hint: Note that cauh flows are constant at the Ycar 1 level, whatever that level is.) Do not round the ietermediate calculations and round the final answer to the nearest whole number. Tax rate 25.046 a. 538,803 b. 943,339 c. 528,573 d. 540,567 e. 340,920

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!