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Dandy's Fun Park is evaluating the purchase of a new game to be located on its Midway. Dandy's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole ga Whack-A Wacky Water Race $35,000 Investment Useful life Estimated annual net cash inflows for 7 years Residual value Depreciation method Required rate of return 0.962 0.925 6% 0.943 0.890 $10,000 $4000 straight-line Using the net present value model, which is the best alternative for Family Fun Park to select? Present Value of $1 Periods 1 2 0.926 0.857 Mole $25,000 10% 0.909 0.826 $5000 $3000 straight-line 12% 0.893 0.797

Dandy's Fun Park is evaluating the purchase of a new game to be located on its Midway. Dandy's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole ga Whack-A Wacky Water Race $35,000 Investment Useful life Estimated annual net cash inflows for 7 years Residual value Depreciation method Required rate of return 0.962 0.925 6% 0.943 0.890 $10,000 $4000 straight-line Using the net present value model, which is the best alternative for Family Fun Park to select? Present Value of $1 Periods 1 2 0.926 0.857 Mole $25,000 10% 0.909 0.826 $5000 $3000 straight-line 12% 0.893 0.797

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Using the net present value model, which is the best alternative for Family Fun Park to select? Present Value of S1 Present Value of Annuity of S1 Neither investment should be selected. The Whack-A-Mole game should be selected. The Wacky Water Race game should be selected. Both investments have the same risk

Dandy's Fun Park is evaluating the purchase of a new game to be located on its Midway. Dandy's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows. Wacky Water Race $35,000 Investment Useful life Estimated annual net cash inflows for 7 years Residual value Depreciation method Required rate of return 4 5 6 7 8 Using the net present value model, which is the best alternative for Family Fun Park to select? Present Value of $1 Periods 1 2 3 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 Present Value of Annuity of $1 Periods 1 2 3 4 5 6 0.962 1.888 2.775 8% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 8% 0.943 1.833 2.673 3.630 4.452 5.242 6.002 6.733 O Neither investment should be selected. O The Whack-A-Mole game should be selected. O The Wacky Water Race game should be selected. O Both investments have the same risk. 3.485 4.212 4.917 5.582 6.210 0.928 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.926 1.783 2.577 3.312 3.993 $10,000 $4000 straight-line 4% 4.623 5.208 5.747 10% 0.909 0.828 0.751 0.683 0.621 0.564 0.513 0.467 10% 0.909 1.738 2.487 3.170 3.791 Whack-A- Mole $25,000 4.355 4.868 5.335 $5000 $3000 straight-line 12% 0.893 0.797 0.712 0.638 0.567 0.507 0.462 0.404 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.584 4.968
Transcribed Image Text:Dandy's Fun Park is evaluating the purchase of a new game to be located on its Midway. Dandy's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows. Wacky Water Race $35,000 Investment Useful life Estimated annual net cash inflows for 7 years Residual value Depreciation method Required rate of return 4 5 6 7 8 Using the net present value model, which is the best alternative for Family Fun Park to select? Present Value of $1 Periods 1 2 3 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 Present Value of Annuity of $1 Periods 1 2 3 4 5 6 0.962 1.888 2.775 8% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 8% 0.943 1.833 2.673 3.630 4.452 5.242 6.002 6.733 O Neither investment should be selected. O The Whack-A-Mole game should be selected. O The Wacky Water Race game should be selected. O Both investments have the same risk. 3.485 4.212 4.917 5.582 6.210 0.928 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.926 1.783 2.577 3.312 3.993 $10,000 $4000 straight-line 4% 4.623 5.208 5.747 10% 0.909 0.828 0.751 0.683 0.621 0.564 0.513 0.467 10% 0.909 1.738 2.487 3.170 3.791 Whack-A- Mole $25,000 4.355 4.868 5.335 $5000 $3000 straight-line 12% 0.893 0.797 0.712 0.638 0.567 0.507 0.462 0.404 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.584 4.968
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