Question: Could someone answer for me this question. Thank you in advance 1. The secretary of the Green Golf Club has been approached by a well-known

Could someone answer for me this question. Thank you in advance Could someone answer for me this question. Thank you in advance 1.

1. The secretary of the Green Golf Club has been approached by a well-known international golfer who wishes to retired to the area. The proposal is that the club will purchase a house next to the golf course for S 600.000 and in addition pay a salary of $ 35,000 per annum for five years for which the golfer will give tuition to members. The house will become the property of the golfer. The benefits to the club will be increased membership and the charging of higher subscriptions, particularly by local businesses. Estimated figures are as follows: Year Additional subscription income (S) Additional membership expenses (5) 200,000 50,000 280,000 30,000 320,000 20,000 280,000 180,000 Ideally the club would like a 15% return on this investment. (The net present values of S1 at 15% and 30% are given appendix table) Required: Calculate for the proposal: (1) Annual Net Cash Inflows (ii) Net present value (ii) Internal rate of retum (iv) Payback period

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