4. Sparkling Car Wash operates a full-service car wash, which operates from 8am to 8pm, 7 days a week. The car wash has 2 automatic stations: an automatic washing and drying station and a manual interior cleaning station. The automatic washing and drying station can handle 30 cars/hour. The interior cleaning station can handle 200 cars/day. Sparkling estimates that future demand for the interior cleaning station for the 7 days of the week (expressed in average number of cars per day is:
Day M T W Th F Sa Su
Cars 160 180 150 140 280 300 250
By installing additional equipment (at a cost of $50,000), Sparkling can increase the capacity of the interior cleaning station to 300 cars/day. Each car wash generates a pretax contribution of $4.00. Should Sparkling install additional equipment if they expect a pretax payback period of 3 years or less?
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.Total washes from the additional capacity:
(80 + 100 + 50) x 52
Total pretax contribution from the additional washes...