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Timo Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $141,000 and have an estimated
Timo Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $141,000 and have an estimated useful life of 5 years. The park will sell it for $66,000 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 $26,200. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view PV 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.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.)
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