Answer to Question #40198 in Economics of Enterprise for Brookie skiles
Outdoor Sports is considering adding a miniature golf course to its facility. The course would cost $138,000, would be depreciated on a straight-line basis over its five-year life, and would have a zero salvage value. The estimated income from the golfing fees would be $72,000 a year with $24,000 of that amount being variable cost. The fixed cost would be $11,600 only in year one. In addition, the firm anticipates an additional $14,000 in revenue each year from its existing facilities if the golf course is added. What is the IRR of this project?