Project cost of capital (r) 10.0% Net investment cost (depreciable basis) $60,000 Number of cars washed 2,800 Average price per car $25.00 Fixed op. cost (excl. deprec.) $10,000 Variable op. cost/unit (i. e., VC per car washed) $5.375 Annual depreciation $20,000 Tax rate 25.0%

a. $33,391
b. $35,149
c. $40,996
d. $38,946
e. $36,999

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

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.