Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $179,000, would be depreciated on a straight-line basis over its 4-year life, and would have a zero...

Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $179,000, would be depreciated on a straight-line basis over its 4-year life, and would have a zero salvage value. The sales would be $93,500 a year, with variable costs of $28,350 and fixed costs of $12,950. In addition, the firm anticipates an additional $22,900 revenue from its existing facilities if the putt putt course added. The project will require $3,550 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 11 percent and a tax rate of 34 percent?

Jun 04, 2022
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