Question: Two friends consider opening a driving range for golfers. They estimate such a range could generate rentals of 20,000 buckets at $3 a bucket in
Two friends consider opening a driving range for golfers. They estimate such a range could generate rentals of 20,000 buckets at $3 a bucket in the first year, and expect rentals to grow at 750 buckets a year thereafter. The equipment requirements include ball dispensing machines, the ball pick-up, and the vehicle tractor that will cost $8,000, $2,000, and $8,000 respectively. The net working capital is $3,000 to start with, and is expected to grow at 5% per year. The annual fixed operating cost for balls and baskets will initially be $3,000 and is expected to grow at 5% per year. The fixed costs of leasing the land and its upkeep will be $53,000 per year. The above is an example of:
| A.debt financing. | |
| B.capital budgeting. | |
| C.equity financing. | |
| D.trade credit. | |
| E.multilateral netting. |
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