What is the net present value of this project

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Reference no: EM132162747

Question - Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $173,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The sales would be $87,000 a year, with variable costs of $27,700 and fixed costs of $12,300. In addition, the firm anticipates an additional $17,700 in revenue from its existing facilities if the putt putt course is added. The project will require $2,900 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 12 percent and a tax rate of 40 percent?

$34,023

$56,301

$40,185

$43,085

$11,071

Reference no: EM132162747

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