Pharoah Corp. is thinking about opening a soccer camp in southern California. To start the camp, Pharoah would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year, the camp would be run for 8 sessions of 1 week each. The company would hire college soccer players as coaches. The camp attendees would be male and female soccer players ages 12-18. Property values in southern California have enjoyed a steady increase in value. It is expected that after using the facility for 20 years, Pharoah can sell the property for more than it was originally purchased for. The following amounts have been estimated. Cost of land Cost to build soccer fields, dorm, and dining facility Annual cash inflows assuming 150 players and 8 weeks Annual cash outflows Estimated useful life Salvage value Discount rate Click here to view the factor table. (a) Net present value $ $318,000 $636,000 $975,200 $890,400 Calculate the net present value of the project. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Should the project be accepted? 20 years $1,590,000 8%
Pharoah Corp. is thinking about opening a soccer camp in southern California. To start the camp, Pharoah would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year, the camp would be run for 8 sessions of 1 week each. The company would hire college soccer players as coaches. The camp attendees would be male and female soccer players ages 12-18. Property values in southern California have enjoyed a steady increase in value. It is expected that after using the facility for 20 years, Pharoah can sell the property for more than it was originally purchased for. The following amounts have been estimated. Cost of land Cost to build soccer fields, dorm, and dining facility Annual cash inflows assuming 150 players and 8 weeks Annual cash outflows Estimated useful life Salvage value Discount rate Click here to view the factor table. (a) Net present value $ $318,000 $636,000 $975,200 $890,400 Calculate the net present value of the project. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Should the project be accepted? 20 years $1,590,000 8%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Pharoah Corp. is thinking about opening a soccer camp in southern California. To start the camp, Pharoah would need to purchase
land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year, the camp would be run for 8
sessions of 1 week each. The company would hire college soccer players as coaches. The camp attendees would be male and female
soccer players ages 12-18. Property values in southern California have enjoyed a steady increase in value. It is expected that after
using the facility for 20 years, Pharoah can sell the property for more than it was originally purchased for. The following amounts have
been estimated.
Cost of land
Cost to build soccer fields, dorm, and dining facility
Annual cash inflows assuming 150 players and 8 weeks
Annual cash outflows
Estimated useful life
Salvage value
Discount rate
Click here to view the factor table.
(a)
Net present value $
$318,000
$636,000
$975,200
$890,400
Should the project be accepted?
20 years
$1,590,000
Calculate the net present value of the project. (If the net present value is negative, use either a negative sign preceding the number e.g.
-45 or parentheses e.g. (45). Round answer to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the
factor table provided.)
8%
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