Question
#12 An analyst has created estimates for a new Putt Putt course near the local elementary school. The course will require an investment (building and
#12
An analyst has created estimates for a new Putt Putt course near the local elementary school. The course will require an investment (building and equipment) at year 0 of $183,879.00. This amount can be depreciated over 5 years using the straight-line approach. The building can be sold for an NSV of $49,009.00 in year 5. The entrepreneur needs help estimating the cash flows for the business.
| 0 | 1 | 2 | 3 | 4 | 5 | |
| Sales | $67,588.00 | $67,588.00 | $67,588.00 | $67,588.00 | $67,588.00 | |
| Expenses | $30,000.00 | $30,000.00 | $30,000.00 | $30,000.00 | $30,000.00 | |
| Depreciation | $36,775.80 | $36,775.80 | $36,775.80 | $36,775.80 | $36,775.80 | |
| Investment in NWC | $1,299.00 | $0 | $0 | $0 | $0 |
The investor wants an 10.00% return on the investment and the firm faces a 34.00% tax rate.
What is the NPV of this project?
Answer format: Currency: Round to: 2 decimal places.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
3rd edition
978-0078025549
