Rock Creek Golf Club Last Revised Dissertation

п»їAn amortization stand has been completed about the potential loan that RCGC would need to attain n order to fund the purchase of 40 gasoline power golf buggies. RCGC would need to obtain a mortgage for $89600 at an 8 percent interest rate for five years which has a payment credited at the end of every year in order to fund the purchase. A payment inside the amount of 22439 will be due at the end of each year for five years the duration of the loan. Total interest paid will be 22605 during the period of the loan. At the time you factor in the eight percent annual interest during the period of five years, the forty five golf carts will cost a total of 112195 to purchase outright 89600 in principal and22604 in interest the stand listed in exhibit a displays how much primary interest will be paid in each year along with the remaining stability following every payment

You will discover two situations to answer this question. 1st scenario RCBB purchases the carts using its own money and we calculate the NPV at 9% and the second scenario is that RCGB purchases the carts using obtained money @ 9% payable in five years amortization table demonstrated in Question 1 )

Initial scenario RCGB uses personal funds to acquire the carts in this case, by comparing the NPV in the purchase alternative versus the rent options, we can see that the NPV @9% from the lease option is usually higher by9826 versus the NPV of the order option. Even the tax safeguard from devaluation and the proceeds from the fingertips of the buggies at the end of 5 years did not help make the order option NPV be greater than the lease options made simple NPV. The conclusion is that RCGB should rental the carts from N

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