Question
show all work, equations & formulas The management of an amusement park is considering purchasing a new ride for $80,000 that would have a useful
show all work, equations & formulas
The management of an amusement park is considering purchasing a new ride for $80,000 that would have a useful life of 10 years and a salvage value of $10,000. The ride would require annual operating costs of $32,000 throughout its useful life. The company's discount rate is 9%. Management is unsure about how much additional ticket revenue the new ride would generate-particularly since customers pay a flat fee when they enter the park that entitles them to unlimited rides. Hopefully, the presence of the ride would attract new customers. (Ignore income taxes.)
Required: How much additional revenue would the ride have to generate per year to make it an attractive investment?
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