Gallant Sports is considering the purchase of a new rock-climbing facility. The company estimates that the construction will require an initial outlay of $351,000. Other cash flows are estimated as follows: Year 1 $(61,000) $140,000
Year 2 $140,000
Year 3 $210,000 Year 4 $129,000
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A. Assuming the company limits its analysis to four years due to economic uncertainties, determine the net present value of the rock-climbing facility if the required rate of return is 8%. B. Should the company develop the facility if the required rate of return is 8%? The rock-climbing facility be developed.
