The Golf Range Is Considering Adding an Additional Driving Range

question 24

Multiple Choice

The Golf Range is considering adding an additional driving range to its facility.The range would cost $229,000, would be depreciated on a straight-line basis over its seven-year life, and would have a zero salvage value.The anticipated revenue from the project is $62,500 a year with $18,400 of that amount being variable cost.The fixed cost would be $15,700.The firm believes that it will earn an additional $22,500 a year from its current operations should the driving range be added.The project will require $3,000 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)8.32 percent
• B)8.68 percent
• C)7.47 percent
• D)11.09 percent
• E)12.14 percent

---

Definitions:

Not-for-profit Agencies

Organizations that operate for purposes other than generating profit, focusing instead on serving a public or social cause.

Fiscal Considerations

Financial factors that are taken into account in the planning and management of resources, often within a government or organization.

Shareholders

Individuals or entities that own shares in a corporation, giving them certain rights and interests in the company's performance and decisions.

Diagnostic Criteria

The set of standards or conditions used to diagnose a disease, condition, or situation accurately.