Susan Wilson operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue $7,620,000 Operating income $670,250 Average assets $3,824,000 The camp's weighted-average cost of capital is 11%, and Susan requires that all new investments generate a return on investment of at least 15%. The camp's current tax rate is 30%. At last week's advisory board meeting, Susan told the board that she had up to $70,000 to invest in new facilities at the camp and asked them to recommend some projects. Today the board's president presented Susan with the following list of three potential investments to improve the camp facilities. Playground Swimming Pool Gym Incremental operating income $1,690 $6.930 $3,910 Average total assets. 13,000 38.500 23,000

Susan Wilson operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue $7,620,000 Operating income $670,250 Average assets $3,824,000 The camp's weighted-average cost of capital is 11%, and Susan requires that all new investments generate a return on investment of at least 15%. The camp's current tax rate is 30%. At last week's advisory board meeting, Susan told the board that she had up to $70,000 to invest in new facilities at the camp and asked them to recommend some projects. Today the board's president presented Susan with the following list of three potential investments to improve the camp facilities. Playground Swimming Pool Gym Incremental operating income $1,690 $6.930 $3,910 Average total assets. 13,000 38.500 23,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter15: Choice Of Business Entity—other Considerations

Section: Chapter Questions

Problem 68P

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