209 fin3-q.docx - Please email [email protected] for the answer to the below question You can also email us for help on any of your

209 fin3-q.docx - Please email...

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Please email [email protected] for the answer to the below question. You can also email us for help on any of your assignments, testbanks etc. Upon completion of your Business Degree you decide you have the necessary skills to go into business for yourself. Consequently, you decide to open a golf driving range. You already own a large tract of land that you purchased in 1995 for $250,000 and that is currently worth $700,000. You would have to clear, level and sod the land, as well as install a sprinkler system, which would cost another $90,000. For tax purposes these costs have to be written off over a five-year period (S/L). Installation of tee markers, mats and a sales office and storage building would cost another $80,000, which also has to be written off over five years for tax purposes. A tractor with cage and ball retriever would cost approximately $12,000, and would be written off over 3 years. You estimate that in any given year the range will be open for 200 days
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Unformatted text preview: and that in an average day there will be 100 buckets of balls sold at $6 per bucket. You will have to pay two employees a total of $45,000 per year to operate and maintain the facility, and another $6,500 per year for new balls and buckets. Another $3,500 per year in miscellaneous expenses can be expected. In five years you expect to close the range and sell the land for $800,000, net of the costs of razing the office and storage building. Your marginal tax rate is 30%. Assuming that, based on the risk of the venture, you require a 17% rate of return on your investment, should you embark on this new venture? (hint: you will need to project the relevant cash flows out in time and then calculate the NPV) Please email [email protected] for the answer to the below question. You can also email us for help on any of your assignments, testbanks etc....
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