Sheffield Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost$141,000 and have an estimated usefu 5 years. The park will sell it for $61,600 at that time. (Amusement parks need to rotaterides to keep people interested.) The ride will be expected to increase net annual flows by $27,100. The company's borrowingrate 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. (If the net present value is negative, use either a negative signpreceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal as displayed in thefactor table provided, e.g. 1.25124. Round present value answer to O decimal places, e.g. 125.)Net present value
Sheffield Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost$141,000 and have an estimated usefu 5 years. The park will sell it for $61,600 at that time. (Amusement parks need to rotaterides to keep people interested.) The ride will be expected to increase net annual flows by $27,100. The company's borrowingrate 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. (If the net present value is negative, use either a negative signpreceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal as displayed in thefactor table provided, e.g. 1.25124. Round present value answer to O decimal places, e.g. 125.)Net present value
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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am. 67.
Transcribed Image Text:Sheffield Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost$141,000 and have an estimated useful life of
5 years. The park will sell it for $61,600 at that time. (Amusement parks need to rotaterides to keep people interested.) The ride will be expected to increase net annual câsh
flows by $27,100. The company's borrowingrate 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. (If the net present value is negative, use either a negative signpreceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places
as displayed in thefactor table provided, e.g. 1.25124. Round present value answer to O decimal places, e.g. 125.)Net present value
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