You are the senior management accountant in the head office of Zap Fitness, a large fitness group. You report to the financial controller, Annie Dobrosi Zap Fitness currently owns and runs 25 gyms throughout Australia. Annie informs you that the marketing department would ke to add a climbing wall to the facilities in each of its gyms, all of which have sufficient room to build this additional facility. Based on a prototype created within one of the Melbourne gyms, the marketing department has provided the following estimates for your use in analysing discounted cash flow, payback and discounted payback periods. All price and cost estimates are exclusive of GST See image & Calculate Net Present Value of thr climbing wall of this Zap Fitness gym. 2 Calculate payback period.

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter13: Tax Credits And Payment Procedures
Section: Chapter Questions
Problem 14CE
icon
Related questions
Question

You are the senior management accountant in the head office of Zap Fitness, a large fitness group. You report to the financial controller, Annie Dobrosi Zap Fitness currently owns and runs 25 gyms throughout Australia. Annie informs you that the marketing department would ke to add a climbing wall to the facilities in each of its gyms, all of which have sufficient room to build this additional facility. Based on a prototype created within one of the Melbourne gyms, the marketing department has provided the following estimates for your use in analysing discounted cash flow, payback and discounted payback periods. All price and cost estimates are exclusive of GST

See image & Calculate Net Present Value of thr climbing wall of this Zap Fitness gym.

2 Calculate payback period.

paamsue /T
$200,000
$105,250
Constructionset-up costs
10% of construction co
Additional staff costs per annum
75
Equipment maintenance per annum
Additional annual memberships
$1,250
Awerage annual membership fee
25
Number of members who would have left on expiry of membership, but
are now remaining with the gym on an ongoing basis' because of the
Installation of the climbing wall
Additional annual casual visits
75 per week
Casual visit charge
$15
Cll
WACC
14%
Equipment life
Expected life of walls and
equipment is five years
Taxation
TightFitt has substantial carried
forward tax losses and is not
expected to pay income tax for
10 years
Tax rate
30%
回器
Transcribed Image Text:paamsue /T $200,000 $105,250 Constructionset-up costs 10% of construction co Additional staff costs per annum 75 Equipment maintenance per annum Additional annual memberships $1,250 Awerage annual membership fee 25 Number of members who would have left on expiry of membership, but are now remaining with the gym on an ongoing basis' because of the Installation of the climbing wall Additional annual casual visits 75 per week Casual visit charge $15 Cll WACC 14% Equipment life Expected life of walls and equipment is five years Taxation TightFitt has substantial carried forward tax losses and is not expected to pay income tax for 10 years Tax rate 30% 回器
Expert Solution
steps

Step by step

Solved in 2 steps with 10 images

Blurred answer
Knowledge Booster
Cost control
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage