I was thinking about the topic B. What would be the answer : b. Ignoring tax, depreciation, and the time value of money, determine how long it will take to recover (pay back) the investment. It will takeenter your response hereyears.(Enter your response rounded to two decimal places.)
I was thinking about the topic B. What would be the answer : b. Ignoring tax, depreciation, and the time value of money, determine how long it will take to recover (pay back) the investment. It will takeenter your response hereyears.(Enter your response rounded to two decimal places.)
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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I was thinking about the topic B. What would be the answer :
b. Ignoring tax, depreciation , and the time value of money, determine how long it will take to recover (pay back) the investment.
It will takeenter your response hereyears.(Enter your response rounded to two decimal
places.)
Transcribed Image Text:The Astro World amusement park has the opportunity to expand its size now (the end of year 0) by purchasing adjacent property for $225,000 and
adding attractions at a cost of $550,000. This expansion is expected to increase attendance by 30 percent over projected attendance without
expansion. The price of admission is $35, with a $5 increase planned for the beginning of year 3. Additional operating costs are expected to be
$100,000 per year. Estimated attendance for the next five years, without expansion, is as follows:
Year
1
2
4
Attendance
30,000
35,000
37,500
39,000
40,000
a. What are the pretax combined cash flows for years 0 through 5 that are attributable to the park's expansion?
The cash flows attributable to the park's expansion in year 0 are $
(Enter your response as an integer.)
The cash flows attributable to the park's expansion in year 1 are $
(Enter your response as an integer.)
The cash flows attributable to the park's expansion in year 2 are $
(Enter your response as an integer.)
The cash flows attributable to the park's expansion in year 3 are $
(Enter your response as an integer.)
The cash flows attributable to the park's expansion in year 4 are $
(Enter your response as an integer.)
The cash flows attributable to the park's expansion in year 5 are $ . (Enter your response as an integer.)
b. Ignoring tax, depreciation, and the time value of money, determine how long it will take to recover (pay back) the investment.
It will take
years. (Enter your response rounded to two decimal places.)
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