Nusajaya Sport Planet is planning to construct a Basketball Sport Arena on which has 50 courts to be used at any point of time. The usage of the courts is expected to be 100%. The initial investment cost for the sport arena is USD600,000. It is expected to generate revenue USD3,000 per court in year 1 and 10% increase for every year from year 2 to 6. The operating cost per generator is USD1,000 and expected to increase by 10% every year from year 2 to 6. At year 6 it can cease the operation by selling the entire business for USD400,000. The cost of capital is expected to be about 12%. Calculate the following and determine should accept the project or not? Net Present Value Technique (NPV) Profitability Index (PI
Nusajaya Sport Planet is planning to construct a Basketball Sport Arena on which has 50 courts to be used at any point of time. The usage of the courts is expected to be 100%. The initial investment cost for the sport arena is USD600,000. It is expected to generate revenue USD3,000 per court in year 1 and 10% increase for every year from year 2 to 6. The operating cost per generator is USD1,000 and expected to increase by 10% every year from year 2 to 6. At year 6 it can cease the operation by selling the entire business for USD400,000. The cost of capital is expected to be about 12%. Calculate the following and determine should accept the project or not? Net Present Value Technique (NPV) Profitability Index (PI
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
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Nusajaya Sport Planet is planning to construct a Basketball Sport Arena on which has 50 courts to be used at any point of time. The usage of the courts is expected to be 100%.
The initial investment cost for the sport arena is USD600,000. It is expected to generate revenue USD3,000 per court in year 1 and 10% increase for every year from year 2 to 6.
The operating cost per generator is USD1,000 and expected to increase by 10% every year from year 2 to 6. At year 6 it can cease the operation by selling the entire business for USD400,000. The cost of capital is expected to be about 12%.
Calculate the following and determine should accept the project or not?
Net Present Value Technique (NPV)- Profitability Index (PI)
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