Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent? Multiple Choice ○ $69,224 ○ $46,070 ○ $44,173 ○ $12,672 ○ $47,823
Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent? Multiple Choice ○ $69,224 ○ $46,070 ○ $44,173 ○ $12,672 ○ $47,823
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 13P
Related questions
Question
6.
![Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life,
and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an
additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent?
Multiple Choice
○ $69,224
○ $46,070
○ $44,173
○ $12,672
○ $47,823](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F902e7e06-dd9d-47fe-961b-7a721406cdf1%2Ffecfe363-c495-4747-a438-9fac3772ceb6%2F9hmqwy_processed.png&w=3840&q=75)
Transcribed Image Text:Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost $188,000, would be depreciated on a straight-line basis over its 6-year life,
and would have a zero salvage value. The sales would be $94,500 a year, with variable costs of $28,450 and fixed costs of $13,050. In addition, the firm anticipates an
additional $23,700 in revenue from its existing facilities if the putt putt course is added. The project will require $3,650 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 40 percent?
Multiple Choice
○ $69,224
○ $46,070
○ $44,173
○ $12,672
○ $47,823
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