Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent? Multiple Choice ○ $69,224 ○ $46,070 ○ $44,173 ○ $12,672 ○ $47,823
Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent? Multiple Choice ○ $69,224 ○ $46,070 ○ $44,173 ○ $12,672 ○ $47,823
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life,
and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an
additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent?
Multiple Choice
○ $69,224
○ $46,070
○ $44,173
○ $12,672
○ $47,823
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