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Business, 06.12.2019 21:31 wbrandi118

Shilling corp. is thinking about opening a cricket boot camp in darwin. in order to start the boot camp, the company would need to purchase land, build five cricket fields, and a dormitory-type sleeping and dining facility to house 100 players. each year the boot camp would be run for 10 sessions of 1 week each. the company would hire local cricket players as coaches. the boot camp attendees would be cricket players aged 12-18. property values in darwin have enjoyed a steady increase in value. it is expected that after using the facility for 20 years, exam corp can sell the property for more than it was originally purchased for. the following amounts have been estimated: cost of land $630,000cost to build dorm and dining facility $2,100,000annual cash inflows assuming 100 players and 10 weeks $2,520,000annual cash outflows $2,260,000estimated useful life 20 yearssalvage value $4,400,000discount rate 10%present value of an annuity of 1 @ 10% 8.514present value of 1 @ 10% 0.149required: a) calculate the net present value of the project. discuss your findings. b) to gauge the sensitivity of the project to these estimates, assume that if only 80 players attend each week, revenues will be $2,085,000 and expenses will be $1,865,000. what is the net present value using these alternative estimates? discuss your findings. c) assuming the original facts, what is the net present value if the project is actually riskier than first assumed, and a 12% discount rate is more appropriate? the present value of 1 at 12% is .104 and the present value of an annuity of 1 is 7.469. discuss your findings.

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