Question
Clown Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $204,212 and have an estimated useful life
Clown Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $204,212 and have an estimated useful life of 11 years. It will be sold for $64,700 cash at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $27,400. The companys cost of capital is 10%. PV information is as follows: 10% PV of $1 for 11 years .35049 PV of an annuity of $1 for 11 years 6.49506 Calculate the net present value of this project to the company.
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