Rocky Pines golf course is planning for the coming season investors would like to earn a 12% return on the company's $47.000.000 of assets. The company primarily incurs fixed costs to groom the greens and tairways Fixed costs are projected to be $20.000.000 for the golfing season About 450,000 goffers are expected each year. Variable costs are about $20 per golfer Rocky Pines golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf Using a cost-plus approach, what price should the course charge for a round of goin? (Round the final answer to the OA $116.00 OB $76.98 OC $20.00 OD 56444

Rocky Pines golf course is planning for the coming season investors would like to earn a 12% return on the company's $47.000.000 of assets. The company primarily incurs fixed costs to groom the greens and tairways Fixed costs are projected to be $20.000.000 for the golfing season About 450,000 goffers are expected each year. Variable costs are about $20 per golfer Rocky Pines golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf Using a cost-plus approach, what price should the course charge for a round of goin? (Round the final answer to the OA $116.00 OB $76.98 OC $20.00 OD 56444

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Aria Acoustics, Incorporated (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year 1 2 3 4 5 Unit Sales 74, 000 87, 000 106, 250 98, 500 67, 800 Production of the implants will require $1,750,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $3,700,000 per year, variable production costs are $260 per unit, and the units are priced at $390 each. The equipment needed to begin production has an installed cost of $17,500,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as seven-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. The tax rate is 25 percent and the required return is 17 percent. MACRS schedule a. What is the NPV of the project? Note: Do not round intermediate…
Ajax Investment Company is considering the purchase of land that could be developed into a class A office project. At the present time, Ajax believes that the site could support a 300,000 rentable square foot project with average rents of $20 per square foot and operating expensesequal to 40 percent of that amount. It also expects rents to grow at 3 percent indefinitely and believes that Ajax should earn a 12 percent return (r) on investment. The building would cost $100 per square foot to build:a. What would the estimated property value and land value be under the above assumptions?b. If rents are suddenly expected to grow at 4 percent indefinitely, what would the property value and land value be now? What percentage change in land value would this be relative to the land value in (a)?c. Instead of (b), suppose rents will grow by only 1 percent because of excessive supply. What would land value be now? What percentage change would this be relative to the land value in (a)?d. Suppose…
Crazy Burger Shop has the following investment opportunity: Burger machinery at t=0 costs $6,000. The cost of making burgers is $2,000 per year at t=1, t=2, and t=3. The burger machinery is depreciated using the straight-line method to $1,500 over 3 years. The market value of the burger machinery after three years is $2,600. Estimated annual sales are $4,500 per year at t=1, t=2, and t=3. The required return is 15%. The tax rate is 18%. Assume no working capital requirements. What is the NPV of this project? A. $259.97 B. $1,006.62 C. $876.44 D. $-702.92
A manufacturing company is considerign the purchase of new machinery to increase its production capacity. The company has identified a new machine that costs $500,000 and is expected to increase production by 20%. The company expects to sell the additional products for $600,000, resulting in a net profit of $100,000. The company can finance the purchase through a bank loan with an interest rate of 5% over a five year term. What is the expected return on investment (ROI) for the purchase of the new machinery 5% 10% 20% 25%
Riverview golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $47,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $11,000,000 for the golfing season. About 450,000 golfers are expected each year. Variable costs are $15 per golfer. The Riverview golf course is a price-taker and won't be able to charge more than its competitors who charge $60 per round of golf. What profit will Riverview earn in terms of dollars? $14,890,000 $5,640,000 $21,360,000 $9,250,000
A service center has installed a new computer costing 1.6 million dollars. The system is expected to serve for 8 years and straight-line depreciation is acceptable. There are additional fixed costs of $300,000 per year. The service repair charges a flat fee of $30 per customer. Variable costs are $20. What will profit be if annual volume is 75,000 units? Question 1 options: $1,000,000.00 $500,000.00 -$250,000.00 $250,000.00
K- Yoga, Spa, and Swim Club is planning for the coming year. Investors would like to eam a 10% rebum on the company's $39,000,000 of assets. The company primarily incurs fixed costs maintain the swimming pools, Fixed costs are projected to be $12,600,000 for the year. About 520,000 members are expected to swim each year. Variable costs are about $10 per swimmer. The club is a price-taker and won't be able to charge more than its competitors who charge $38 for a membership. What profit (loss) will it earn in terms of dollars? OA $12,600,000 OB. $1,900,000 OC. $7,919,962 OD. $(1,960,000)
You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $300 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $175 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $135,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $25,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 12 percent. (Use SL depreciation table) What will the cash flows for this project be? Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.
A new garbage truck can be purchased for $64,000. Its expected useful life is six years at which time its market value will be zero. Annual receipts is expected to be $20,000 with expenses of $2,000 per year over the six-year study period. The company's MARR is 18%. a. What is the ROI? b. Determine if this is a good investment using Net Present Worth(NPW) method. What is its Net Annual Worth? с. d. Using IRR method, is this investment acceptable?
Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company’s $45,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 430,000 golfers are expected each year. Variable costs are about $17 per golfer. Mountaintop golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should Mountaintop charge for a round of golf.
cure Rex Industries plans to expand its product line. The project requires an initial investment of $285,000 to purchase new equipment. The project is expected to generate the following annual revenues and expenses each year during its 9-year life: . Sales revenues Variable costs Contribution margin Fixed costs: - Salary expense - Rent expense Depreciation expense O 4.4 years O 4.6 years O 8.4 years $31,000 39,000 30,000 O 8.9 years O None of the above $170,000 (38,000) $132,000 Operating income The only non-cash item of income or expense is depreciation expense. The salvage value of the equipment at the end of the 9 years is $15,000. What is the payback period of this project in years? Round to one decimal point. (100,000) $32,000 PQ
Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in 2013 by releasing a new putter. The new product will require new equipment for $406,762.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers: Year 1 Year 2 Putter price Units sold COGS Selling and Administrative $63.07 18,114.00 41.00% of sales 19.00% of sales $63.07 10,757.00 41.00% of sales 19.00% of sales Calloway has a 14.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $125,352.00. What is the NPV of the project?