Crane Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $167,270 and have an estimated useful life of 7 years. It can be sold for $69,200 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 $26,300. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view the factor 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 is unacceptable

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Crane Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $167,270 and have
an estimated useful life of 7 years. It can be sold f $69,200 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 $26,300. The company's borrowing rate is 8%. Its cost of capital
is 10%. Click here to view the factor 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 is unacceptable
Transcribed Image Text:Crane Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $167,270 and have an estimated useful life of 7 years. It can be sold f $69,200 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 $26,300. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view the factor 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 is unacceptable
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