Kim Epson operates a full-service car wash, which operates from 8 a.m. to 8 p.m., 7 days a week. The car wash has two stations: an automatic washing and drying station and a manual interior cleaning station. The automatic washing and drying station can handle 30 cars per hour. The interior cleaning station can handle 200 cars per day. Based on a recent yearend review of operations, Kim estimates that future demand for the interior cleaning station for the 7 days of the week, expressed in average number of cars per day, would be as follows: Day Mon. Tues. Wed. Thurs. Fri. Sat. Sun. Cars 160 180 150 140 280 300 250 By installing additional equipment (at a cost of $50,000), Kim can increase the capacity of the interior cleaning station to 300 cars per day. Each car wash generates a pretax contribution of $4.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less?
Kim Epson operates a full-service car wash, which operates from 8 a.m. to 8 p.m., 7 days a week. The car wash has two stations: an automatic washing and drying station and a manual interior cleaning station. The automatic washing and drying station can handle 30 cars per hour. The interior cleaning station can handle 200 cars per day. Based on a recent yearend review of operations, Kim estimates that future demand for the interior cleaning station for the 7 days of the week, expressed in average number of cars per day, would be as follows:
| Day | Mon. | Tues. | Wed. | Thurs. | Fri. | Sat. | Sun. |
| Cars | 160 | 180 | 150 | 140 | 280 | 300 | 250 |
By installing additional equipment (at a cost of $50,000), Kim can increase the capacity of the interior cleaning station to 300 cars per day. Each car wash generates a pretax contribution of $4.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less?
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