Question
Tamarisk Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $120,000 and have an estimated
Tamarisk Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $120,000 and have an estimated useful life of 5 years. The park will sellit for $60,900 at that time. (Amusement parks need to rotate: rides to keep people interested.) The ride will be expected to increase net annual cash flows by $21,500. The company's borrowing rate is 8%. Its cost of capital is 10% Cliek here to view the factor table. Calculate the net present value of this project to the company. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.3. (45). For calculation purposes, use 5 decimal places as displayed in the a factor table provided, e.8 1.25124. Round present value answer to 0 decimal places, e.8. 125.)
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