Question $17$

Fun Land is considering adding a miniature golf course to its facility. The course would cost

$$60000,$ would be depreciated on a straight line basis over its $4-$year life, and would have a

zero salvage value. The estimated income from the golfing fees would be $$30000$ a year

with $$9000$ of that amount being variable cost. The fixed cost would be $$9000.$ In addition,

the firm anticipates an additional $$12000$ in revenue from its existing facilities if the course

is added. The project will require $$6000$ 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 $10$

percent and a tax rate of $40$ percent?

$$1,089\mathrm{.}59$

$$2,763\mathrm{.}34$

$$5,390\mathrm{.}77$

$$9,444\mathrm{.}03$

$$7,451\mathrm{.}89$