Golf Course (W.Crum) _ Gotrocks offers you a chance to buy a miniature golf course he has
Question:
Golf Course (W.Crum) _ Gotrocks offers you a chance to buy a miniature golf course he has built near a resort area. It would cost you $50,000 cash. For this you would get an operating golf course built on leased property at a cost of
$30,000, with lease payments of $10,000 per year, payable at end of the year.
Assume a salvage value of $5,000 for the equipment on the course at end of the lease. Operating costs per year for the golf course are $40,000, disregarding depreciation. Income per year, all in cash, is $60,000. You wish to use a 10 percent interest rate in your evaluation. The lease expires in 10 years.
. Does this appear to be a good investment for you? Show all figures.
- Compute the payback period for this investment. L01
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