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Family Day Out Fun Center is evaluating the purchase of a new game to be located on its Midway. It has budgeted $40,000 for
Family Day Out Fun Center is evaluating the purchase of a new game to be located on its Midway. It has budgeted $40,000 for this purchase. The company h two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows. Investment Useful life Wacky Water Race $39,000 7 Whack-A- Mole $23,000 7 Estimated annual net cash inflows for 7 years $8,000 $5,000 Fesidual value Depreciation method. $4,000 straight-line $1,000 straight-line Required rate of return 4% 12% Using the net present value model, which alternative(s) should Family Day Out Fun Center select? A. The Wacky Water Race game should be selected. OB. Both investments should be selected. OC. The Whack-A-Mole game should be selected. OD. Neither investment should be selected.
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