Golf course installing a new automaticsprinkler system

Reference no: EM13834394

Scenario:Golf Course installing a new AutomaticSprinkler SystemThe eighteen-hole Redwood Golf Course is in need of a new sprinkler system, which is estimatedto cost $1 million. The Golf Course Superintendent, who is in charge of maintaining the golfcourse, has advised the members that the system must be replaced within the next year becausethe system is beginning to fail. The board of directors has known about this problem for severalyears but has been putting off the repair due to the cost.The members, however, have been complaining because the condition of the course isdeteriorating. After looking into the matter further, the Board estimates that the property haslost nearly $250,000 in incremental profits over the past year alone due to membership terminationsand lower guest fees and golf shop sales. If this problem is not solved quickly, moremembers will leave and revenues will continue to decrease.Mr. Hans Tripler, general manager of Redwood, has requested a loan for $1 million from alocal bank. The bank has offered to grant the loan at a 6.5% interest rate for a term of ten years.

Question:

1. Calculate the annual payment on the loan. (please show work)

Reference no: EM13834394

Questions Cloud

Periods of high inflation : During periods of high inflation, U.S. firms have strong incentives to purchase short-lived assets and frequently replace them, rather than investing in long-lived assets. True, False, Uncertain and explain

Financial institution is caught up in a financial scandal : In a minimum of 250 words: If a financial institution is caught up in a financial scandal, would you expect its value to fall by more or less than the amount of any fines and settlement payments?

What price should you charge : Assume the demand curve has a constant slope. If you had sufficient inventory, how many units would you sell at $90? Assume your marginal cost is $44 per unit. Given only this and the above information, what price should you charge? Explain your r..

Economic exposure to exchange rate risk : Corporations have both accounting exposure and economic exposure to exchange rate risk. What is the difference between these two? Which types of exposure would be most significant, and why?

Golf course installing a new automaticsprinkler system : Scenario:Golf Course installing a new AutomaticSprinkler SystemThe eighteen-hole Redwood Golf Course is in need of a new sprinkler system, which is estimatedto cost $1 million. The Golf Course Superintendent, who is in charge of maintaining the golfc..

How much did the stock price change over the past year : Shareholders had a good year, earning a 18% annual rate of return. The P/E ratio today is 13.9 and the company just announced earnings per share of $3.20 . The company has a 25% payout ratio. How much did the stock price change over the past year?a. ..

The direct transfer of funds from investors : In the last decade there has been a shift towards the direct transfer of funds from investors to the corporate sector. examine some of the reasons for this trend

Process consists of two welding machines in parallel : Q1) The layout of a process consists of two welding machines in parallel, one grinding and one drilling machine. Two panels are released simultaneously to two welding machines where some parts are fitted to the panels using these welding machines. Th..

Estimated economic life of the machine : On January 1, Year 8, Von Company entered into two non-cancellable leases of new machines for use in its manufacturing operations. The first lease does not contain a bargain purchase option, and the lease term is equal to 80% of the estimated economi..

User Account

All Pages