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The owners of Sunland de Trois-Rivieres hockey club are considering a deal with an older, established club whereby they can acquire the services of Pierre
The owners of Sunland de Trois-Rivieres hockey club are considering a deal with an older, established club whereby they can acquire the services of Pierre Sheridan, a very high scorer and great gate attraction, in exchange for Richard Wilson (currently paid $16,050 annually). The established club would also receive $535,000 cash from Sunland. The owners' accountants have assembled the following data: Estimated useful life of Sheridan 5 years Estimated residual value of Sheridan $21,400 Estimated useful life of Wilson 5 years Estimated residual value of Wilson None Current cash offer for Wilson received from another club $53,500 Applicable desired rate of return 10%Other information: Additional Gate Receipts Because of Sheridan Additional Expenses of Year Sheridan's Salary Handling Higher Volume $64,200 $353,100 $35,310 2 74,900 321,000 32,100 85,600 214,000 21,400 4 85,600 107,000 10,700 77,040 42,800 4,280 Click here to view the factor table.Based on your analysis of the data, calculate the net present value of Sheridan's services. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net present value Recommend whether or not the club should acquire the services of Pierre Sheridan. The hockey club v acquire the services of Sheridan
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