Northwest Florida State College Operations And Supply Chain Management Assignment Help - TQM

Question - Outdoor Sports is considering adding a miniature golf course to its facility. The course would cost
$138,000, would be depreciated on a straight line basis over its 5-year life, and would have a zero
salvage value. The estimated income from the golfing fees would be $72,000 a year with $24,000 of
that amount being variable cost. The fixed cost would be $11,600. In addition, the firm anticipates an
additional $14,000 in revenue from its existing facilities if the golf course is added. The project will
require $3,000 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 34 percent?

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