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Sharkey's Fun Centre contains a number of electronic games, as well as a miniature gol the building. Paul Sharkey, the owner, would like to construct
Sharkey's Fun Centre contains a number of electronic games, as well as a miniature gol the building. Paul Sharkey, the owner, would like to construct a water slide on one portic the following information about the slide: a. Water slide equipment could be purchased and installed at a cost of $510,000. Accor be usable for 12 years, after which it would have no salvage value. b. Sharkey would use straight-line depreciation on the slide equipment. c. To make room for the water slide, several rides would be dismantled and sold. These be sold for $82,000 to an amusement park in a nearby city. d. Sharkey has concluded that about 46,000 more people would use the water slide ea The admission price would be $5.40 per person (the same price that the Fun Centre e. On the basis of experience at other water slides, Sharkey estimates that incremental would be as follows: salaries, $96,200; insurance, $4,700; utilities, $14,700; maintena Required: 1. Prepare an income statement showing the expected incremental net income each yea SHARKEY'S FUN CENTRE Incremental Income Statement Deduct: Operating expenses: 2-a. Compute the SRR expected from the water slide. Simple rate of return % 2-b. On the basis of this computation, would the water slide be constructed if Shark investments? O Yes O No 3-a. Compute the payback period for the water slide. (Round your answer to 2 dec Payback period 333 years 3-b. If Sharkey requires a payback period of five years or less, should the water slic O Yes Sharkey's Fun Centre contains a number of electronic games, as well as a miniature gol the building. Paul Sharkey, the owner, would like to construct a water slide on one portic the following information about the slide: a. Water slide equipment could be purchased and installed at a cost of $510,000. Accor be usable for 12 years, after which it would have no salvage value. b. Sharkey would use straight-line depreciation on the slide equipment. c. To make room for the water slide, several rides would be dismantled and sold. These be sold for $82,000 to an amusement park in a nearby city. d. Sharkey has concluded that about 46,000 more people would use the water slide ea The admission price would be $5.40 per person (the same price that the Fun Centre e. On the basis of experience at other water slides, Sharkey estimates that incremental would be as follows: salaries, $96,200; insurance, $4,700; utilities, $14,700; maintena Required: 1. Prepare an income statement showing the expected incremental net income each yea SHARKEY'S FUN CENTRE Incremental Income Statement Deduct: Operating expenses: 2-a. Compute the SRR expected from the water slide. Simple rate of return % 2-b. On the basis of this computation, would the water slide be constructed if Shark investments? O Yes O No 3-a. Compute the payback period for the water slide. (Round your answer to 2 dec Payback period 333 years 3-b. If Sharkey requires a payback period of five years or less, should the water slic O Yes
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