Question
Wonder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $172,897 and have an estimated useful life
Wonder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $172,897 and have an estimated useful life of 9 years. It will be sold for $70,700 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $25,200. The companys borrowing rate is 8%. Its cost of capital is 10%. (Refer the below 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). Round present value to 0 decimal places, e.g. 125. Round Discount Factor to 5 decimal places, e.g. 0.17986.)
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