Question
Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $166,000, would be depreciated on a straight-line basis
Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $166,000, would be depreciated on a straight-line basis over its 5-year life, and would have a zero salvage value. The sales would be $83,500 a year, with variable costs of $27,350 and fixed costs of $11,950. In addition, the firm anticipates an additional $14,900 in revenue from its existing facilities if the putt putt course is added. The project will require $2,550 of net working capital, which is recoverable at the end of the project. What is the net present value of this project at a discount rate of 13 percent and a tax rate of 35 percent?
Answer choices:
43,850
11,369
8,819
25,246
9,985
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