Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $145,000 per year. Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $267,500. While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 10% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service. The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to O A. $171,750 O B. $14,500 O C. $145,000

Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $145,000 per year. Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $267,500. While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 10% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service. The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to O A. $171,750 O B. $14,500 O C. $145,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Hardev
The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after three years of use. Ten cars will be needed, which can be purchased at a discounted price of $25,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole: Annual cost of servicing, taxes, and licensing $ 4,100 Repairs, first year $ 2,000 Repairs, second year $ 4,500 Repairs, third year $ 6,500 At the end of three years, the fleet could be sold for one-half of the original purchase price. Lease alternative: The company can lease the cars under a three-year lease contract.…
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