The Heritage Amusement Park would like to construct a new ride called the Sonic Boom, which the park management feels would be very popular. The ride would cost $392,000 to construct, and it would have a 10% salvage value at the end of its 15-year useful life. The company estimates that the following annual costs and revenues would be associated with the ride: (Ignore income taxes):

Ticket revenues

$

270,000

Less operating expenses:

Maintenance

$

60,000

Salaries

60,000

Depreciation

23,520

Insurance

52,000

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Total operating expenses

195,520

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Net operating income

$

74,480

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2a.	Compute the simple rate of return promised by the new ride. (Round your answer to the nearest whole percent. Omit the "%" sign in your response.)

Simple rate of return

%

2b.

If Heritage Amusement Park requires a simple rate of return of at least 13%, does the Sonic Boom ride meet this criterion?

	Yes
	No