Location: Rexburg, ID
For Sale Website:
The attached spreadsheet shows a forecast of a car wash located in Rexburg, Idaho, with a list price of $1,500,000. This purchase includes all assets within the business such as land, equipment, supplies and building. This spreadsheet encompasses a forecast, pro forma income and balance sheet, as well as a weighted average cost of capital. The spreadsheet ends with a free cash flow computation
Some of the major assumption that we came up with are: a 25% down payment on the mortgage, land valued at $150,000, equipment at $700,000, and building at $350,000. To compute the weighted average cost of capital, we assumed a beta of .80, T-bill rate of 1.95%, and S&P 500 rate of 5.50%. With these assumptions, we have projected WACC for 2020 of 23.91%
The free cash flow formula has lead to losses in total cash for operations, so we can assume that revenue is low and expenses are high. If all assets were sold, costs can be covered and even a gain made on cash. With the WACC at 23.91%, we computed an Internal Rate of Return of -3.64%, which can show the reason for losses.
The weakest part of our projected revenue has to do with the number of customers that are available in within the Rexburg area. Since the market is so low, we project that a profit for such a business is not possible based on our assumption and forecast. If the number of potential customers could increase, a profit is more likely, but the location of Rexburg is not ideal for such a business.