Question
Outdoor Sports is considering adding a putt-putt golf course to its facility. The course would cost $176,000, would be depreciated on a straight-line basis over
Outdoor Sports is considering adding a putt-putt golf course to its facility. The course would cost $176,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The sales would be $88,500 a year, with variable costs of $27,850 and fixed costs of $12,450. In addition, the firm anticipates an additional $18,900 in revenue from its existing facilities if the putt putt course is added. The project will require $3,050 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 14 percent and a tax rate of 21 percent?
$52,428
$19,573
$26,185
$47,338
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