Question
Marge's Campground is considering adding a driving range to its facility. The range would cost $60,000, would be depreciated on a straight-line basis over its
Marge's Campground is considering adding a driving range to its facility. The range would cost $60,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The anticipated revenue from the project is $46,000 a year with $10,000 variable cost. The fixed cost would be $6,000. The project will require $9,000 of net working capital each year, which is recoverable at the end of the project. What is the net present value of this project if the relevant discount rate is 10 percent and the tax rate is 21 percent?
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