Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Carla Vista Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $152,835 and have an estimated useful

image text in transcribed

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Carla Vista Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $152,835 and have an estimated useful life of 6 years. It can be sold for $63,100 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 $26,000. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view PV table. Calculate the net present value of this project to the company and determine whether the project is acceptable. (If the net present value is negative, use either a negative sign preceding the number eg - 45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places, e.g. 125.) Net present value $ The project TABLE 1 Future Value of 1 \begin{tabular}{cccccccccccc} (n) Periods & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 0 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 \\ \hline 1 & 1.04000 & 1.05000 & 1.06000 & 1.07000 & 1.08000 & 1.09000 & 1.10000 & 1.11000 & 1.12000 & 1.15000 \\ \hline 2 & 1.08160 & 1.10250 & 1.12360 & 1.14490 & 1.16640 & 1.18810 & 1.21000 & 1.23210 & 1.25440 & 1.32250 \\ \hline 3 & 1.12486 & 1.15763 & 1.19102 & 1.22504 & 1.25971 & 1.29503 & 1.33100 & 1.36763 & 1.40493 & 1.52088 \\ \hline 4 & 1.16986 & 1.21551 & 1.26248 & 1.31080 & 1.36049 & 1.41158 & 1.46410 & 1.51807 & 1.57352 & 1.74901 \\ \hline 5 & 1.21665 & 1.27628 & 1.33823 & 1.40255 & 1.46933 & 1.53862 & 1.61051 & 1.68506 & 1.76234 & 2.01136 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 6 & 1.26532 & 1.34010 & 1.41852 & 1.50073 & 1.58687 & 1.67710 & 1.77156 & 1.87041 & 1.97382 & 2.31306 \\ \hline 7 & 1.31593 & 1.40710 & 1.50363 & 1.60578 & 1.71382 & 1.82804 & 1.94872 & 2.07616 & 2.21068 & 2.66002 \\ \hline 8 & 1.36857 & 1.47746 & 1.59385 & 1.71819 & 1.85093 & 1.99256 & 2.14359 & 2.30454 & 2.47596 & 3.05902 \\ \hline 9 & 1.42331 & 1.55133 & 1.68948 & 1.83846 & 1.99900 & 2.17189 & 2.35795 & 2.55803 & 2.77308 & 3.51788 \\ \hline 10 & 1.48024 & 1.62889 & 1.79085 & 1.96715 & 2.15892 & 2.36736 & 2.59374 & 2.83942 & 3.10585 & 4.04556 \\ \hline \end{tabular} \begin{tabular}{lllllllllll} \hline 11 & 1.53945 & 1.71034 & 1.89830 & 2.10485 & 2.33164 & 2.58043 & 2.85312 & 3.15176 & 3.47855 & 4.65239 \\ \hline 12 & 1.60103 & 1.79586 & 2.01220 & 2.25219 & 2.51817 & 2.81267 & 3.13843 & 3.49845 & 3.89598 & 5.35025 \\ \hline 13 & 1.66507 & 1.88565 & 2.13293 & 2.40985 & 2.71962 & 3.06581 & 3.45227 & 3.88328 & 4.36349 & 6.15279 \\ \hline 14 & 1.73168 & 1.97993 & 2.26090 & 2.57853 & 2.93719 & 3.34173 & 3.79750 & 4.31044 & 4.88711 & 7.07571 \\ \hline 15 & 1.80094 & 2.07893 & 2.39656 & 2.75903 & 3.17217 & 3.64248 & 4.17725 & 4.78459 & 5.47357 & 8.13706 \\ \hline \end{tabular} \begin{tabular}{ccccccccccc} \hline 16 & 1.87298 & 2.18287 & 2.54035 & 2.95216 & 3.42594 & 3.97031 & 4.59497 & 5.31089 & 6.13039 & 9.35762 \\ \hline 17 & 1.94790 & 2.29202 & 2.69277 & 3.15882 & 3.70002 & 4.32763 & 5.05447 & 5.89509 & 6.86604 & 10.76126 \\ \hline 18 & 2.02582 & 2.40662 & 2.85434 & 3.37993 & 3.99602 & 4.71712 & 5.55992 & 6.54355 & 7.68997 & 12.37545 \\ \hline 19 & 2.10685 & 2.52695 & 3.02560 & 3.61653 & 4.31570 & 5.14166 & 6.11591 & 7.26334 & 8.61276 & 14.23177 \\ \hline 20 & 2.19112 & 2.65330 & 3.20714 & 3.86968 & 4.66096 & 5.60441 & 6.72750 & 8.06231 & 9.64629 & 16.36654 \\ \hline \end{tabular} TABLE 2 Future Value of an Annuity of 1 \begin{tabular}{ccccccccccc} (n) Payments & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 1 & 1.00000 & 1.00000 & 1.00000 & 1.0000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 \\ \hline 2 & 2.04000 & 2.05000 & 2.06000 & 2.0700 & 2.08000 & 2.09000 & 2.10000 & 2.11000 & 2.12000 & 2.15000 \\ \hline 3 & 3.12160 & 3.15250 & 3.18360 & 3.2149 & 3.24640 & 3.27810 & 3.31000 & 3.34210 & 3.37440 & 3.47250 \\ \hline 4 & 4.24646 & 4.31013 & 4.37462 & 4.4399 & 4.50611 & 4.57313 & 4.64100 & 4.70973 & 4.77933 & 4.99338 \\ \hline 5 & 5.41632 & 5.52563 & 5.63709 & 5.7507 & 5.86660 & 5.98471 & 6.10510 & 6.22780 & 6.35285 & 6.74238 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrrr} \hline 6 & 6.63298 & 6.80191 & 6.97532 & 7.1533 & 7.33592 & 7.52334 & 7.71561 & 7.91286 & 8.11519 & 8.75374 \\ \hline 7 & 7.89829 & 8.14201 & 8.39384 & 8.6540 & 8.92280 & 9.20044 & 9.48717 & 9.78327 & 10.08901 & 11.06680 \\ \hline 8 & 9.21423 & 9.54911 & 9.89747 & 10.2598 & 10.63663 & 11.02847 & 11.43589 & 11.85943 & 12.29969 & 13.72682 \\ \hline 9 & 10.58280 & 11.02656 & 11.49132 & 11.9780 & 12.48756 & 13.02104 & 13.57948 & 14.16397 & 14.77566 & 16.78584 \\ \hline 10 & 12.00611 & 12.57789 & 13.18079 & 13.8164 & 14.48656 & 15.19293 & 15.93743 & 16.72201 & 17.54874 & 20.30372 \\ \hline \end{tabular} \begin{tabular}{lllllllllll} \hline 11 & 13.48635 & 14.20679 & 14.97164 & 15.7836 & 16.64549 & 17.56029 & 18.53117 & 19.56143 & 20.65458 & 24.34928 \\ \hline 12 & 15.02581 & 15.91713 & 16.86994 & 17.8885 & 18.97713 & 20.14072 & 21.38428 & 22.71319 & 24.13313 & 29.00167 \\ \hline 13 & 16.62684 & 17.71298 & 18.88214 & 20.1406 & 21.49530 & 22.95339 & 24.52271 & 26.21164 & 28.02911 & 34.35192 \\ \hline 14 & 18.29191 & 19.59863 & 21.01507 & 22.5505 & 24.21492 & 26.01919 & 27.97498 & 30.09492 & 32.39260 & 40.50471 \\ \hline 15 & 20.02359 & 21.57856 & 23.27597 & 25.1290 & 27.15211 & 29.36092 & 31.77248 & 34.40536 & 37.27972 & 47.58041 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 16 & 21.82453 & 23.65749 & 25.67253 & 27.8881 & 30.32428 & 33.00340 & 35.94973 & 39.18995 & 42.75328 & 55.71747 \\ \hline 17 & 23.69751 & 25.84037 & 28.21288 & 30.8402 & 33.75023 & 36.97351 & 40.54470 & 44.50084 & 48.88367 & 65.07509 \\ \hline 18 & 25.64541 & 28.13238 & 30.90565 & 33.9990 & 37.45024 & 41.30134 & 45.59917 & 50.39593 & 55.74972 & 75.83636 \\ \hline 19 & 27.67123 & 30.53900 & 33.75999 & 37.3790 & 41.44626 & 46.01846 & 51.15909 & 56.93949 & 63.43968 & 88.21181 \\ \hline 20 & 29.77808 & 33.06595 & 36.78559 & 40.9955 & 45.76196 & 51.16012 & 57.27500 & 64.20283 & 72.05244 & 102.44358 \\ \hline \end{tabular} T Tr1wan ac 1 TABLE 4 Present Value of an Annuity of 1 \begin{tabular}{ccccccccccc} \hline(n) Payments & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 1 & .96154 & .95238 & .94340 & .93458 & .92593 & .91743 & .90909 & .90090 & .89286 & .86957 \\ \hline 2 & 1.88609 & 1.85941 & 1.83339 & 1.80802 & 1.78326 & 1.75911 & 1.73554 & 1.71252 & 1.69005 & 1.62571 \\ \hline 3 & 2.77509 & 2.72325 & 2.67301 & 2.62432 & 2.57710 & 2.53130 & 2.48685 & 2.44371 & 2.40183 & 2.28323 \\ \hline 4 & 3.62990 & 3.54595 & 3.46511 & 3.38721 & 3.31213 & 3.23972 & 3.16986 & 3.10245 & 3.03735 & 2.85498 \\ \hline 5 & 4.45182 & 4.32948 & 4.21236 & 4.10020 & 3.99271 & 3.88965 & 3.79079 & 3.69590 & 3.60478 & 3.35216 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 6 & 5.24214 & 5.07569 & 4.91732 & 4.76654 & 4.62288 & 4.48592 & 4.35526 & 4.23054 & 4.11141 & 3.78448 \\ \hline 7 & 6.00205 & 5.78637 & 5.58238 & 5.38929 & 5.20637 & 5.03295 & 4.86842 & 4.71220 & 4.56376 & 4.16042 \\ \hline 8 & 6.73274 & 6.46321 & 6.20979 & 5.97130 & 5.74664 & 5.53482 & 5.33493 & 5.14612 & 4.96764 & 4.48732 \\ \hline 9 & 7.43533 & 7.10782 & 6.80169 & 6.51523 & 6.24689 & 5.99525 & 5.75902 & 5.53705 & 5.32825 & 4.77158 \\ \hline 10 & 8.11090 & 7.72173 & 7.36009 & 7.02358 & 6.71008 & 6.41766 & 6.14457 & 5.88923 & 5.65022 & 5.01877 \\ \hline \end{tabular} \begin{tabular}{rrrrrrrrrrr} \hline 11 & 8.76048 & 8.30641 & 7.88687 & 7.49867 & 7.13896 & 6.80519 & 6.49506 & 6.20652 & 5.93770 & 5.23371 \\ \hline 12 & 9.38507 & 8.86325 & 8.38384 & 7.94269 & 7.53608 & 7.16073 & 6.81369 & 6.49236 & 6.19437 & 5.42062 \\ \hline 13 & 9.98565 & 9.39357 & 8.85268 & 8.35765 & 7.90378 & 7.48690 & 7.10336 & 6.74987 & 6.42355 & 5.58315 \\ \hline 14 & 10.56312 & 9.89864 & 9.29498 & 8.74547 & 8.24424 & 7.78615 & 7.36669 & 6.98187 & 6.62817 & 5.72448 \\ \hline 15 & 11.11839 & 10.37966 & 9.71225 & 9.10791 & 8.55948 & 8.06069 & 7.60608 & 7.19087 & 6.81086 & 5.84737 \\ \hline \end{tabular} \begin{tabular}{lllllllllll} \hline 16 & 11.65230 & 10.83777 & 10.10590 & 9.44665 & 8.85137 & 8.31256 & 7.82371 & 7.37916 & 6.97399 & 5.95424 \\ \hline 17 & 12.16567 & 11.27407 & 10.47726 & 9.76322 & 9.12164 & 8.54363 & 8.02155 & 7.54879 & 7.11963 & 6.04716 \\ \hline 18 & 12.65930 & 11.68959 & 10.82760 & 10.05909 & 9.37189 & 8.75563 & 8.20141 & 7.70162 & 7.24967 & 6.12797 \\ \hline 19 & 13.13394 & 12.08532 & 11.15812 & 10.33560 & 9.60360 & 8.95012 & 8.36492 & 7.83929 & 7.36578 & 6.19823 \\ \hline 20 & 13.59033 & 12.46221 & 11.46992 & 10.59401 & 9.81815 & 9.12855 & 8.51356 & 7.96333 & 7.46944 & 6.25933 \\ \hline \end{tabular}

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

People Centric Skills Interpersonal And Communication Skills For Financial Professionals

Authors: Danny M. Goldberg

2nd Edition

1119669308, 978-1119669302

More Books

Students also viewed these Accounting questions

Question

7. List behaviors to improve effective leadership in meetings

Answered: 1 week ago

Question

6. Explain the six-step group decision process

Answered: 1 week ago