capital share 200,000

loan 80,000

Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $136,000 and have an estimated useful life of 5 years. It will be sold for $70,000 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $25,000. The company's borrowing rate is 8%. Its cost of capital is 10% Required: 1. Determine the total cost ofthe project and the source of funds for the project. 2. Did the cost of the project stay within budget? 3. If the present value method was used,review the calculations. Do you agree with the calculations and methods used? If the present value wasnot used to evaluate the project, estimate the project's net present vabe Evaluate the capital budgeting procedures that were actually used by Thunder Corporation 4. 5