Brief Exercise 25-03 Bramble Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $150,425 and have an estimated useful life of 9 years. It can be sold for $69,600 at the end of that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $20,300. 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 and determine whether the project is acceptable. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to o decimal places, e.g. 125.) Net present value The project Do It! Review 25-03 Concord Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following. Solar Wind Present value of annual cash flows $51,590 $132,588 Initial investment $38,500 $104,400 Determine the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25.) Solar Wind Net present value $ Profitability index Which energy source should it choose? The company should choose energy source. Brief Exercise 25-06 Bonita Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $249,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $45,800 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $260,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $39,200 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 10%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value $ Revised estimate net present value $ The project a success