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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started