7,Outdoor Sports is considering adding a putt putt golf course to its facility. The course would...

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7,Outdoor Sports is considering adding a putt putt golf courseto its facility. The course would cost $171,000, would bedepreciated on a straight-line basis over its 4-year life, andwould have a zero salvage value. The sales would be $93,500 a year,with variable costs of $28,050 and fixed costs of $12,650. Inaddition, the firm anticipates an additional $20,500 in revenuefrom its existing facilities if the putt putt course is added. Theproject will require $3,250 of net working capital, which isrecoverable at the end of the project. What is the net presentvalue of this project at a discount rate of 13 percent and a taxrate of 34 percent?

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Initial Investment for the Project Initial Investment for the Project Cost of the asset Working capital needed 171000 3250 174250 Annual Operating Cash Flow OCF Revenue 114000 93500 20500 Variable Costs 28050 Fixed Costs See Answer

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7,Outdoor Sports is considering adding a putt putt golf courseto its facility. The course would cost $171,000, would bedepreciated on a straight-line basis over its 4-year life, andwould have a zero salvage value. The sales would be $93,500 a year,with variable costs of $28,050 and fixed costs of $12,650. Inaddition, the firm anticipates an additional $20,500 in revenuefrom its existing facilities if the putt putt course is added. Theproject will require $3,250 of net working capital, which isrecoverable at the end of the project. What is the net presentvalue of this project at a discount rate of 13 percent and a taxrate of 34 percent?