crap value at end 5 year is R50Million Expectation of 880000 visitors which will remain constant over the life of the project. Entrance fee is R40 per visitor, and they expected to spend R15 on souvenirs and R5 on refreshments. Variable cost are R25 per visitor (includes operating the attraction, souvenirs and refreshments) Bloom will lease land at a cost of R500000 per annum, which will remain the same through out the project Maintenance costs are estimated to be R200000 Directors require all investments to generate a positive net prese
Bloom(PTY) LTD considering opening a new attractions.
Initial capital investment R120million to purchase equiment -equipment life span is 5years and
Expectation of 880000 visitors which will remain constant over the life of the project.
Entrance fee is R40 per visitor, and they expected to spend R15 on souvenirs and R5 on refreshments. Variable cost are R25 per visitor (includes operating the attraction, souvenirs and refreshments)
Bloom will lease land at a cost of R500000 per annum, which will remain the same through out the project
Maintenance costs are estimated to be R200000
Directors require all investments to generate a positive
Assume all cash flows arise at the end of the year, except those relating to the initial capital investment of R120million.
Question -Determine whether Bloom pty ltd should invest in the expansion of it tourist attraction business based on its existing investment criteria?
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