Question
MidWest Amusements is in the process of reviewing 10 proposals for new rides at its theme parks in cities scattered throughout the American heartland. The
MidWest Amusements is in the process of reviewing 10 proposals for new rides at its theme parks in cities scattered throughout the American heartland. The company's only experienced safety engineer must carefully review plans and monitor the construction of all new rides. However, she is only available to work on new rides for 1,699 hours during the year. The net present values and the amount of safety engineer time required for the proposed rides are listed below:
Proposed Ride Net Present Value Safety Engineer Time Required (hours)
Ride 1 $1,278,225 345
Ride 2 $1,152,000 360
Ride 3 $561,600 270
Ride 4 $598,500 175
Ride 5 $546,250 250
Ride 6 $338,850 135
Ride 7 $219,300 129
Ride 8 $259,760 136
Ride 9 $575,640 164
Ride 10 $412,360 244
Total $5,942,485 2208
Required:
1. Which of the proposed rides should the company build this year? (Note: The incremental profit of a long-term project such as constructing a new ride is its net present value.)(You may select more than one answer.)
2. What would be the total net present value of the rides built under your plan?
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