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

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Definitions:

Alternator's Rotor

The rotating component within an alternator that produces the magnetic field, essential for generating electricity in an automotive charging system.

Three-phase Alternator

An electric generator that produces three separate waves of alternating current, delivering power at constant rates.

Output Frequency

The frequency at which an electronic device, such as an oscillator or amplifier, outputs its signal.

Revolving Armature Type

A design in electrical generators where the armature, or the part that generates electricity, rotates within a stationary magnetic field.