Considering adding putt putt golf course to its facility

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Reference no: EM132016824

Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $184,000, would be depreciated on a straight-line basis over its 5-year life, and would have a zero salvage value. The sales would be $92,500 a year, with variable costs of $28,250 and fixed costs of $12,850. In addition, the firm anticipates an additional $22,100 in revenue from its existing facilities if the putt putt course is added. The project will require $3,450 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 35 percent?

Reference no: EM132016824

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