60.1K

Verified Solution

Link Copied!

Brief Exercise 24-3

Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $195,029 and have an estimated useful life of 10 years. It will be sold for $60,000 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $27,300. The companys 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 0 decimal places, e.g. 125.)

Net present value $

The project _ acceptable.

Brief Exercise 24-3 Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $195,029 and have an estimated useful life of 10 years. It will be sold for $60,000 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $27,300. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view PV table co is erpeced t irse set cnpanybrowng rat is 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 Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of s used SAVE FOR LATERSUBHIT

Answer & Explanation Solved by verified expert

See Answer