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In: Finance
The Tempo Golf and Country Club in London, Ontario, is evaluating two different irrigation system options....
The Tempo Golf and Country Club in London, Ontario, is evaluating two different irrigation system options. An underground automatic irrigation system will cost $9.2 million to install and $80,500 pre-tax annually to operate. It will not have to be replaced for 20 years. An aboveground system will cost $6.8 million to install, but $195,000 per year to operate. The aboveground equipment has an effective operating life of nine years. The country club leases its land from the city and both systems are considered leasehold improvements; as a result, straight-line capital cost allowance is used throughout, and neither system has any salvage value. The tax rate is 39%. Calculate the equivalent annual cost for each method if we use a 13% discount rate? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Negative answers should be indicated by a minus sign. Omit $ sign in your response.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The Tempo Golf and Country Club in London, Ontario, is evaluating two different irrigation system options....
The Tempo Golf and Country Club in London, Ontario, is
evaluating two different irrigation system options. An underground
automatic irrigation system will cost $9.2 million to install and
$82,000 pre-tax annually to operate. It will not have to be
replaced for 20 years. An aboveground system will cost $6.8 million
to install, but $210,000 per year to operate. The aboveground
equipment has an effective operating life of nine years. The
country club leases its land from the city and both...
The Tempo Golf and Country Club in London, Ontario, is evaluating two different irrigation system options....
The Tempo Golf and Country Club in London, Ontario, is
evaluating two different irrigation system options. An underground
automatic irrigation system will cost $9.2 million to install and
$81,200 pre-tax annually to operate. It will not have to be
replaced for 20 years. An aboveground system will cost $6.8 million
to install, but $202,000 per year to operate. The aboveground
equipment has an effective operating life of nine years. The
country club leases its land from the city and both...
McGilla Golf is evaluating a new golf club. The clubs will sell for $930 per set...
McGilla Golf is evaluating a new golf club. The clubs will sell
for $930 per set and have a variable cost of $415 per set. The
company has spent $140,000 for a marketing study that determined
the company will sell 47,000 sets per year for seven years. The
marketing study also determined that the company will lose sales of
8,800 sets of its high-priced clubs. The high-priced clubs sell at
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McGilla Golf is evaluating a new golf club. The clubs will sell for $875 per set...
McGilla Golf is evaluating a new golf club. The clubs will sell
for $875 per set and have a variable cost of $430 per set. The
company has spent $150,000 for a marketing study that determined
the company will sell 60,000 sets per year for seven years. The
marketing study also determined that the company will lose sales of
12,000 sets of its high-priced clubs. The high-priced clubs sell at
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McGilla Golf is evaluating a new golf club. The clubs will sell for $1,000 per set...
McGilla Golf is evaluating a new golf club. The clubs will sell
for $1,000 per set and have a variable cost of $450 per set. The
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the company will sell 50,500 sets per year for seven years. The
marketing study also determined that the company will lose sales of
9,500 sets of its high-priced clubs. The high-priced clubs sell at
$1,500 and have variable costs of $630. The company also...
McGilla Golf is evaluating a new golf club. The clubs will sell for $750 per set...
McGilla Golf is
evaluating a new golf club. The clubs will sell for $750 per set
and have a variable cost of $350 per set. The company has spent
$145,000 for a marketing study that determined the company will
sell 57,000 sets per year for seven years. The marketing study also
determined that the company will lose sales of 9,000 sets of its
high-priced clubs. The high-priced clubs sell at $1,050 and have
variable costs of $650. The company will...
McGilla Golf is evaluating a new golf club. The clubs will sell for $930 per set...
McGilla Golf is evaluating a new golf club. The clubs will sell
for $930 per set and have a variable cost of $415 per set. The
company has spent $140,000 for a marketing study that determined
the company will sell 47,000 sets per year for seven years. The
marketing study also determined that the company will lose sales of
8,800 sets of its high-priced clubs. The high-priced clubs sell at
$1,430 and have variable costs of $560. The company also...
McGilla Golf is evaluating a new golf club. The clubs will sell for $960 per set...
McGilla Golf is evaluating a new golf club. The clubs will sell
for $960 per set and have a variable cost of $430 per set. The
company has spent $147,500 for a marketing study that determined
the company will sell 48,500 sets per year for seven years. The
marketing study also determined that the company will lose sales of
9,100 sets of its high-priced clubs. The high-priced clubs sell at
$1,460 and have variable costs of $590. The company also...
McGilla Golf is evaluating a new golf club. The clubs will sell for $1,070 per set...
McGilla Golf is
evaluating a new golf club. The clubs will sell for $1,070 per set
and have a variable cost of $485 per set. The company has spent
$175,000 for a marketing study that determined the company will
sell 54,000 sets per year for seven years. The marketing study also
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variable costs of $700. The company also...
Business Decision Case The Reserve Club is a traditional private golf and country club that has...
Business Decision Case
The Reserve Club is a traditional private golf and country club
that has three different categories of memberships: golf, tennis
& swimming, and social. Golf members have access to all
amenities and programs in the Club, Tennis & Swimming members
have access to all amenities and programs except use of the golf
course, and Social members have access to only the social
activities of the club, excluding golf, tennis, and swimming. All
members have clubhouse privileges, including...
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