Barbara is preparing a budget for her rally racing team, Olinda Racing, after recently confirming two major sponsorship agreements for the next two years with a large Canadian publishing company and...

Barbara is preparing a budget for her rally racing team, Olinda Racing, after recently confirming two major sponsorship agreements for the next two years with a large Canadian publishing company and with a local tourist attraction. The plan is to compete in each of the six events in the Canadian championship over the next two years. Barbara estimates that she currently has $50,000 invested in her rally car "Zuke" and in the tools and equipment the team owns. Before the new season starts, her estimate is that car upgrade costs of $5,000 are required. The six races run from February to November, so Barbara has assumed cash flows otherwise occur evenly throughout the years as follows:

Barbara is using a cost of capital of 12% in his budgeting. Olinda Racing currently has $18,400 in the bank to be used to cover net costs.


Required:

Using the above data and a net present value approach, determine if Olinda Racing needs to raise additional funding to compete over the next two years.