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Fun Land is considering adding a miniature golf course to its facility. The course would cost $64000, would be depreciated on a straight line basis over its 4 year life, and would have a zero salvage value. The estimated income from the golfing fees would be $46500 a year with $17,500 of that amount being variable cost. The fixed cost would be $12000. In addition, the firm anticipates an additional $14000 in revenue from its existing facilities if the course is added. The project will require $13000 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 6 percent and a tax rate of 35 percent? a. $28,289.13 b. $31,323.02 c. $25,497.21 d. $22,523.69 e. $14,390.24

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Financial Management, Finance

Category:- Financial Management
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