The Interstate Hotel Is Considering Building a Car Wash at the Edge

Multiple Choice

The Interstate Hotel is considering building a car wash at the edge of their property. Fixed costs are estimated at $62,000 a year. The variable cost per unit is estimated at $1.75. The estimated price per car wash is $4.95. What is the base case financial break-even point if the company expects a five year project and requires a 20% return (Ignore taxes and use annuity factor 2.9906) ?

A) 6,479
B) 12,957
C) 19,375
D) 25,854
E) 33,667