Internal Rate of Return on the Project Assignment
Marge’s Campground is considering adding a miniature golf course to its facility. The course she wants would cost $30,000, would be depreciated on a straight line basis over the 4-year life of the course, and would have zero salvage value. Marge estimates the income from the golf fees would be $28,000 a year with $10,000 of that amount being variable cost. The fixed cost would be $5,000. Marge feels that the course would net her, after costs, an additional $10,000 in revenue from her existing facilities. The project will require $1,000 of net working capital which is recoverable at the end of the project. What is the internal rate of return on this project at a tax rate of 34 percent?
a. 66.76 percent b. 44.35 percent c. 26.18 percent d. 21.19 percent e. 24.50 percent. Get Finance homework help today