User Account

All Pages

Study guide , Managerial Accounting

Assignment Help:
The following information pertains to Fairways Driving Range, Inc.:

The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they will need to purchase a ball dispensing machine, a ball pick-up vehicle and a tractor and accessories for a total cost of $70,000. All of this depreciable equipment will be 7-year MACRS property. The project is expected to operate for 6 years, at the end of which the equipment will be sold for 40% of its original cost. Fairways expects to have $40,000 of fixed costs each year other than depreciation. These fixed costs include the cost of leasing the land for the driving range.

Fairways expects to have sales for the first year of $80,000 based on renting 20,000 buckets of balls @ $4 per bucket. For years 2-6, they expect the number of buckets rented to steadily increase by 750 buckets per year, while the price will remain constant @ $4. Expenditures needed for buckets and balls each year are expected to be 15% of the gross revenues for the year.

The project would have an initial working capital requirement of $5,000 and this requirement will be 10% of all revenues after that. Fairways will be in the 15% tax bracket for all years in question. The company’s required rate of return for this project is 20%.

Please complete the following tables to determine the NPV for Fairways Driving Range, Inc.’s proposed Sanford venture. PLEASE ROUND ALL FIGURES TO THE NEAREST WHOLE DOLLAR!

Related Discussions:- Study guide

Illustration of standard error of estimate , Illustration of Standard error...

Illustration of Standard error of estimate The production manager of XYZ Company is concerned about the apparent fluctuation in efficiency and wants to determine how labour cos

Temporary closure of factory or department, TEMPORARY CLOSURE OF FACTORY OR...

TEMPORARY CLOSURE OF FACTORY OR DEPARTMENT Here there is a similar situation to that of discontinuance of a product such as Model N40. A factory which is expected to earn some

Definition of activities based costing, Definition of Activities based cost...

Definition of Activities based costing Activity based costing is a system that focuses on activities as the fundamental cost objects and uses the costs of these activities as b

Consistent Descion framing, What does it mean when we say consistency is th...

What does it mean when we say consistency is the central feature of economic rationality?

Evaluate a proposed investment, Q. Evaluate a proposed investment? BMP ...

Q. Evaluate a proposed investment? BMP Consulting (BMPC) conducted an analysis of Delta Corp. and found that the firm consists of two different divisions: Pet Lovers, a pet sup

What is master budget, What is Master budget Financial budget are conce...

What is Master budget Financial budget are concerned with cash receipts and disbursements working capital. Several functional budgets are integrated into master budget. This bu

Inventory control, INVENTORY CONTROL The activities of a business durin...

INVENTORY CONTROL The activities of a business during a financial year combine investment projects in progress with new projects commencing and others terminate within the year

Electronic fund transfer, By electronic fund transfer the collection float ...

By electronic fund transfer the collection float can be completely removed the other benefit of electronic fund transfer is instant updating of accounts and reporting of balances a

Estimate a demand function and forcast demand, Question 1: Assuming tha...

Question 1: Assuming that you are appointed consultant on economic matters for a company and you are asked to analyse the market structures in various sectors of the economy.

Acouting concept brfely explen, any accounting concept brifely explen

any accounting concept brifely explen

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd