Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cant figure this out! Fun World Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $150,152 and

Cant figure this out!
image text in transcribed
Fun World Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $150,152 and have an estimated useful life of 6 years. It can be sold for $69,100 at the end of that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $26,700. Its cost of capital is 10%. Present value factor of cash inflows for 6 years is 4.355. Present value factor of cash inflow for salvage value at year 6 is 0.564. Calculate the net present value of this project to the company and determine whether the project is acceptable. (Hint: For the present value of net cash flows, both net annual cash flows in current value and salvage value in current value should be added together.) - Round net present value to 0 decimal place such as 20. - For any negative net present value, use either a negative sign preceding the number as 30 or parentheses as (30). - Do NOT enter a dollar sign. For example, if you are typing \$10,000 as your answer, answer should be typed as 10,000 without any dollar sign. Net Present Value: $ The project is (Write either acceptable or not acceptable.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: John J. Wild, Ken W. Shaw

2010 Edition

9789813155497, 73379581, 9813155493, 978-0073379586

More Books

Students also viewed these Accounting questions

Question

Describe the figurehead role in an organisation.

Answered: 1 week ago

Question

Identify the elements of a usable summary

Answered: 1 week ago

Question

What is electric dipole explain with example

Answered: 1 week ago

Question

What is polarization? Describe it with examples.

Answered: 1 week ago