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Net Present Value Essay

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Below is an essay on "Net Present Value" from Anti Essays, your source for research papers, essays, and term paper examples.

Calculation of the Net Present Value for Wonderland

The Net Present Value and its various components are based on the given facts and figures:
  * Wonderland has just spent £400,000 on market research into the theme park, and is encouraged by the findings.

  * The theme park is expected to attract an average of 20,000 visitors per day for at least five years

  * The price of admission to the theme park is expected to be £25 per adult and £15 per child. 70% of visitors are forecast to be children. In addition to admission revenues, it is expected that the average visitor will spend £10 on food and drinks, (of which 40% is contribution, and £7 on gifts and souvenirs, (of which 45% is contribution).

  * All costs and receipts (excluding maintenance and construction costs and the realisable value) are shown at current prices; the company expects all costs and receipts to rise by 5% per year from current on a compound bases.

  * The theme park would cost a total of £500 million and could be constructed and working after 1 year of investment (I.e. revenue will start in year 2). Half of the £500 million would be payable immediately, and half in one year’s time. In addition working capital of £60 million will be required from the beginning of the project.

  * The non-current asset has an after tax realisable value between £100 million and £200 million after five years of the project.

  * Operation costs (excluding labour (please see below) are expected to be £17 million in the first year of operation, increasing by £5 million per year.

  * Insurance costs per annum are £3 million, of which £2 million per year is due directly to the theme park project.

  * Insurance and labour cost will be increased in line with the Consumer price i.e. 5% per annum compounded annually

  * The project would require 1000 employees with a cost of £35 million per annum (at current prices). The dual use of existing advertising campaigns...

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Net Present Value. Anti Essays. Retrieved December 10, 2018, from the World Wide Web: http://cassandralynndesignllc.com/free-essays/Net-Present-Value-74735.html