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REVIEW OF FACTS
Rock Creek Golf Club is a public golf course owned by a private company and managed by Lee Jeffries. The case entails a debate about the golf carts used to take players around the course instead of walking around. The carts they already owned were old and there was a need for new golf carts.
Approached by two salesman, Lee Jeffries was forced to chose to make a deal with one of them. Salesman A offered carts at $2,240 each and at the end of five years the expected salvage value was going to be $240 each.
Salesman B proposed to lease the golf carts for $500 dollars per cart per year. This was payable at the end of the year for
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Recommendations and Conclusions
In conclusion of this case, we learned that leasing and purchasing items for the purpose of business has different implications on the financial status of the company. This is especially true when the terms for each are different.
Another point to consider is the future impact of either buying or leasing a piece of equipment has on the future of the company. Does the company hope to depreciate the value of a purchased piece of equipment and then gain some salvage value at the end. Could any salvage value come from taking this approach? Would there be any potential buyers for the used equipment if it was yours to sell at the end of a useful life? These are all questions to consider along with the NPV and terms and payments and financial stability of the company when determining whether one should buy or lease something.
I would recommend that Mr. Jeffries take all the analysis he can consider into account before making his decision keeping in mind that the revenues and expenses he will generate will be the same regardless of whether he leases or buys the carts. I would then pick the option with highest NPV and with the payments for both principal and interest that make sense for his company.
Keywords:
review facts rock creek golf club public golf course owned private company managed jeffries case entails debate about golf
The lease agreement comes out to be the better option when the lease term is long at about 60 months than a purchase agreement for the same length of time. This is because in the lease agreement, the company is able to break even at about 51 months as compared to the purchase agreement which needs the company to make the payments till the end of the term in order to breakeven. In addition to this,
a. Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Joe delivers $12,000 worth of gadgets to the city that will be tested in March. Joe purchased the gadgets especially for this contract and paid $8,500
Occasional Golfers They are limited by economic constraints, however would play more if the financial situations permitted. This opens the doors for Bear Creek to provide less expensive alternatives. They make up 62 percent of the market, so it would be highly beneficial to incorporate activities they can participate in.
Commercial Capital Corporation is the leasing subsidiary of a major regional bank and offers a lease at 12.75 million per year for 4 years. The first payment is due upon delivery and installation. The rest of the payments are due each subsequent year at the beginning of the year. This cost includes the same service contract as what would have been obtained with purchase.
The Country Club would have a unique staff to ensure that these amenities have a professionally treated and cared for golf course. The person that is in charge of this area is called a Golf Course Superintendent. The Golf Course Superintendent is responsible for “turf grass/plant material maintenance programs, property/asset management, personnel management, budget/forecasting, financial management, member relations, scheduling/maintenance or irrigation systems, pesticide applications, related recordings, and compliance of regulatory issues. “ (Rutgers, 2016) Additionally, there are trainers that the Country Club may hire called Golf Pro or Tennis Pro. These positions are intended to assist them in developing the member’s skill set and technique so they become more proficient at practicing and playing the game. Tennis Pros can make a salary as low as $24,000 and up to more than $74,000, according to salarylist.com. (Salarylist.com, 2016) Golf Pros can make up to $76,000 a year for their salary. (Payscale.com,
In The Legend of Bagger Vance by Steven Pressfield, Rannulph Junah, a golfer, finds his swing. Hardy Greaves, the narrator, retells the match between Rannulph Junah, Bobby Jones and Walter Hagen from his point of view to Michael, who is facing conflicts in his own life. The story begins in Savannah, Georgia with Mr. Invergordon, a wealthy Scotsman. He envisions the grandest golf course the South has ever seen and has it built by Alister Mackenzie. A 500-room hotel is also built. However, when the Crash of 1929 hits, Mr. Invergordon’s empire is lost and he cannot take the financial pressure. After, Mr. Invergordon’s suicide, Adele, his socialite daughter, inherits the course. Krewe Island is finally finished almost a year later. Unfortunately,
Our town is notable for having several interesting golf courses. For those residents whose interests lie in other pursuits, those courses are a waste of large quantities of otherwise useful space that could be better used to construct another mall or store. For the golf enthusiasts among us, however, the preponderance of courses is a delightful benefit of living in this otherwise uninteresting locale, where the only saving grace is the plentiful supply of interesting people.
The company’s CEO and founder Ely Callaway was a golf champion himself during his twenties and was a powerful motivator defining the company’s culture
The founder, Ely Callaway’s vision is: “If we make a truly more satisfying product for the average golfer, not the professionals, and make it pleasingly different form the competition, the company would be successful.” However, this vision is change from other company’s visions; the difference being that the price is not mention.
What are the key takeaways to remember when determining future lease versus buy decisions of this magnitude?
| Weakness * A lot of other Golf courses * Older course * Members not pleased
showed Mrs. Carter the job estimation sheet, it laid out the numbers showing that Lambeth could not do the job for less than $1,625. Right there Lambeth would lose $125 since Mrs. Carter was not willing to pay any more than $1,500, not to mention their $275 profit. If the company would have taken the job for $1,500, instead of $1,900, they would have lost a total of $400.
Callaway Golf Company began to take form in 1983, after Ely Reeves Callaway Jr. sold Callaway Vineyard and Winery for a $9 million dollar profit. Shortly after the sell of the winery, Callaway ventured in to the golf equipment industry and bought 50 percent of Hickory Stick USA. Callaway knew from the very beginning that this company’s profits were limited as long as the product line wasn’t changing. “Callaway noticed that most golf equipment had changed very little since the 1920s and believed that , due to the difficulty of the game of golf, recreational golfers would be willing to invest in high-tech, premium-priced clubs if such clubs could improve their game by being more
According to Steve Collings (2010), the accounting treatment of leases has presented a lot of problems over the years for the particular profession. Problems are observed in the way some leases are being treated in a business’ income statement and statement of financial position. Although, as we are going to expand more on that, the major problem of accounting for leases according to Collings (2010), is the manipulation of financial statements by incorrectly categorizing ‘finance leases’ as ‘operating leases’. The main purpose of the essay is to discuss why accounting for leases has been so controversial and whether the new standard (IFRS16) will give a more meaningful picture of companies’ financial position for lessees.
Landscaping and Golf Courses- LLCB’s involvement in golf courses and landscaping includes earthworks, shaping, drainage, irrigation, turfing, beautification, landscaping and the construction of ponds and infrastructure.