Question
Valley Club is considering adding a miniature golf course to its facility. The course would cost $48,000, would be depreciated on a straight-line basis over
Valley Club is considering adding a miniature golf course to its facility. The course would cost $48,000, would be depreciated on a straight-line basis over its 4-year life, and would have a zero salvage value. The estimated income from the golfing fees would be $35,000 a year with $10,000 of that amount being variable cost. The fixed cost would be $5,000. The project will require $4,000 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 12 percent and a tax rate of 21 percent?
$6,186.31 | ||
$7,412.69 | ||
$8,734.16 | ||
$9,152.90 |
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