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Business, 25.06.2019 08:00 corinnerodriguez2001

You purchased land 3 years ago for $75,000 and believe its market value is now $120,000. you are considering building a hotel on this land instead of selling it. to build the hotel, it will initially cost you $205,000, an expense that you plan to depreciate straight line over the next three years. wells fargo offered you a loan for $60,000 at an 8% interest rate to be repaid over the next 4 years. you anticipate that the hotel will earn revenues of $334,000 each year, while expenses will be a mere $75,000 each year. the initial working capital requirement will be $14,000 which will be recovered in the last year. the tax rate is 28%. your estimated cost of capital is 15%. what is the net present value of this project?

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