Assessment Scenario TightFitt currently owns and runs 25 gyms throughout Australia and New Zealand. You have beer contacted by the marketing department as they would like to add a climbing wall to each gym to increase the number of sales and annual members. Based on a prototype created in the Adelaide Bym, the marketing department have provided the following estimates to help you determine if TightFitt should proceed with construction of the climbing walls. Initial investment Additional staff costs per annum $200,000 $105,250 Equipment maintenance per annum Additional annual memberships Average annual membership fee 10% of construction cost 100 $1,250 Additional casual visits 75 per week $15 Casual visit charge WACC 14% Equipment life Tax rate 5 years 30% Assessment questions 1. Please use the following capital budgeting techniques to determine if TightFitt should proceed with the climbing wall project. Net present value a) b) Payback period c) Accounting rate of return To finance the climbing wall, TightFitt have arranged a five-year bank loan with Wendigo Bank. The loan has an interest rate of 4.8%pa and repayments will be made monthly. Based on these figures, please cal culate the monthly repayment. 2. Using your answer to the previous question, please create a loan repayment schedule in Microsoft Excel to show all repayments over the five-year period. 3. It's been two years since construction and Tight Fitt has been performing better than expected. The company now has a large surplus of cash and they want to use this to repay the loan faster. When you read the loan agreement, it says you can repay the loan within four years however the interest rate will increase to 6.2 %pa . 4. Based on the above information, please calculate a new schedule in Microsoft Excel showing the loan repayments between the end of second year and final repayment at the end of fourth year. Current Version: v2.0 Author: WAIFS UMe 02188C