The resort project would require a $20,500,000 investment. At the end of ten years, some of the equipment would have a salvage value of $300,000. The project would require additional working capital $450,000 in the form of an increase in the minimum balance required by their bank and this working capital would be released at the end of the project. The project would provide estimated net income each year as follows:Sales $6,500,000

Less variable expenses 4,275,000

Contribution margin $2,225,000

Less fixed expenses:

Fixed expenses* $1,115,000

Net income $1,111,000

Net present value

Explanation:

Missing Information    

Weighted average cost of capital: 8% and  Solve for net present value:

investment: project outlay 20,500,000 + increase in working capital 450,000

F10 salvage value: 300,000 + 450,000 liberate working capital

cahsflow per year income 1,111,000

C1,111,000.00

time10

rate0.08

PV$7,454,900.4342

Maturity  $750,000.00

time  10.00

rate  0.08000

PV   347,395.1161

Net present value

7,454,900 + 347,395 - 20,500,000 - 450,000 = -13.147.705

3rd the reason why is because of management and leadership

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