Question

The investors of Smith Autos have put up $500,000 to construct a building and purchase all equipment required to wash cars. The investors expect to earn a minimum return of 10% on their investment. If the money to set up the business had been borrowed from a bank instead, the car wash owners would have paid a 10% interest rate. The car wash is open 50 weeks per year and washes 800 cars per week. Whether operative or not, the company must pay $1,000 per week return to investors and $1,000 per week as insurance. The variable costs for the 800 weekly washes includes $1,000 labour cost and $600 materials cost. There are many car washes of equal quality and service in the area and they charge $5 per car wash.

a) Based on your knowledge of the different forms of market structure, do you think Smith Autos should stay in business? Show calculations. (2 Marks)
b) Graphically represent the company's performance, showing profit or loss. (1 Mark)
c) Another car wash company operates inside a gated community in the vicinity and offers its services at $6 per wash under a licensed agreement. Highlight how is it possible for this company to charge a higher price than the market and still stay in business. (1 Mark)
After a few mouths, due to the forces of demand and supply, the market price is pushed down to $1.5 per car wash. What course of action will you suggest to Smith Autos? (1 Mark

Answer 1

Answer:

America senate Vishwa ka sabse adhik shaktishali de diya Sadan hai vivechna Karen 2500 shabdns for their buisness what should the sales team emphasise to differentiate accenture ai capabilities in the marketplace

Answer 2

Explanation:

Let us first calculate the expenses that the company will be paying to investors, bank and operational costs.

Money to be paid to investors per year = 50 x 1000 = 50000

Money to be paid to bank insurance per year = 50 x 1000 = 50000

Operational cost of washing 800 vehicles in 50 weeks = 1600 x 50 = 80,000

Now let us calculate the sales the company would generate;

Sales from washing 800 cars/ week for 50 weeks = 5 x 800 x 50 = 200,000

Overall profit of the company = 200,000 - 50,000 - 50,000 - 80,000

Profit = 20,000

Although the company gets profit at the end of the year bit it is not a very huge one