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Please answer question 6. Fun World Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $150,152 and
Please answer question 6.
Fun World Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $150,152 and have an estimated useful life of 6 years. It can be sold for $69,100 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 $26,700. Its cost of capital is 10%. Present value factor of cash inflows for 6 years is 4.355. Present value factor of cash inflow for salvage value at year 6 is 0.564. Calculate the net present value of this project to the company and determine whether the project is acceptable. (Hint: For the present value of net cash flows, both net annual cash flows in current value and salvage value in current value should be added together.) - Round net present value to 0 decimal place such as 20. - For any negative net present value, use either a negative sign preceding the number as -30 or parentheses as (30). - Do NOT enter a dollar sign. For example, if you are typing $10,000 as your answer, answer should be typed as 10,000 without any dollar sign. Net Present Value: $ The project is .(Write either or not Question 7 22.5pts Orange Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck. The new truck would cost $137,200. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $19,700. At the end of 8 years, the company will sell the truck for an estimated $42,600. Traditionally, the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset's estimated useful life. John Doe, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company's cost of capital is 8%. Present value factor of cash inflows for 8 years is 5.747 . Present valueStep by Step Solution
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