Dandy's Fun Park is evaluating the purchase of a new game to be located on its Midway. Dandy's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices Wacky Water Whack-A Mole $22,000 $33,000 Useful Ife Estimated annual net cash inflows for 8 years Residual value Depreciation method Required rate of retun $10,000 4,000 straight-line 8% 8,000 $4,000 straight-ine 12% Using the net present value model, which atematives) should Family Fun Park select? O A The wacky Water Race game should be selected and net present value is $6,726 higher O B. The Wacky Water Race game should be selected and net present value is $6,728 lower C. The whack-A-Mole garne should be selected.and net present value is $7,270 lower O D. The Wacky Water Race game should be selected and net present value is $7,270 higher vino v nnary is co sido ng the pur haso of a stato-o-tho-art bouing machino Tho now machino wil oost $28.2 0 and will havo a useful ifo of 10 yoars. The nuw machino wil pro do not rate of return ORR) for the new botting machine? h savengs of $5.000 per year. What s the intor al Click the icon to view the present value of $1 table Click the icon to view the present value of annuity of $1 table. Data Table 10% . 12% Present Value of $1 Periods 0.840 0.792 0.675 0.683 0.621 0.564 0.636 0.567 0.507 Data Table 0681 0.630 0,705 0.456 0.400 Present Value of 0.627 0.592 0.558 0.540 0.500 0.463 0.404 10% 0.424 2.577 10 0.322 0 270 3.465 3.037 3.605 3.993 4.623 5205 4.355 Print Done 5.582 4.564 5.335 5.650 Print Done Oceanview Manufacturing is considering an investment that would require an initial net investment of $680,000. The following revenueslexpenses relate exclusively to the investment Sales Variable expenses Contibution margin F ed expenses $370,000 $350,000 20,000 Rent expense Depreciation expense Total fixed expenscS income 5160,000 The investment will have a residual value of $50,000 at the end of its 12 year useful Ife. What is the payback period for this investment? If they use payback to make the decision and they require a payback of 2 years would they invest or reject the investment? O A. 4.125 years and reject it B. 3.00 years and reject it. O c. 300 years and invest O D. 6.00 years and invest The Silverside Company is considering investing in two alternative projects: Project 2 $400,000 5 $90,000 $25,000 $280,000 Useful life (years) Estimated annual net cash inflows for useful life Residual value $65,000 $12,000 Straight- line Straight-line me 10% Required rate of return What is the payback period for Project 1? If payback is used to decide which project should they choose? O A. 16 years and choose Project 1 O B. 4.44 years and choose Project 2 . 4.44 years and choose Project 1 D. 4.17 years and choose Project 2 C
