MidWest Amusements is in the process of reviewing 10 proposals for new rides at its theme...

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MidWest Amusements is in the process of reviewing 10 proposalsfor new rides at its theme parks in cities scattered throughout theAmerican heartland. The company’s only experienced safety engineermust carefully review plans and monitor the construction of all newrides. However, she is only available to work on new rides for1,479 hours during the year. The net present values and the amountof safety engineer time required for the proposed rides are listedbelow:
Proposed Ride Net Present Value SafetyEngineer
Time Required
(hours)
Ride 1 $ 930,000 250
Ride 2 1,152,000 360
Ride 3 615,000 300
Ride 4 593,250 175
Ride 5 542,500 250
Ride 6 506,250 150
Ride 7 448,000 112
Ride 8 687,800 362
Ride 9 637,000 182
Ride 10 418,320 252
Total $ 6,530,120 2,393
Required:
1. Which of the proposed rides should the company build thisyear? (Note: The incremental profit of a long-term project such asconstructing a new ride is its net present value.) (You mayselect more than one answer. Single click the box with a check markfor correct answers and double click to empty the box for the wronganswers.)
Ride 1
Ride 6
Ride 3
Ride 9
Ride 5
Ride 4
Ride 7
Ride 10
Ride 2
Ride 8
2. What would be the total net present value of the rides builtunder your plan?
Total $0

Answer & Explanation Solved by verified expert

3.6 Ratings (416 Votes)

Answer Q1 We have limiting factor of total hr of 1479 during the year Lets compute NPVhr for each of the propose ride Based on highest NPVhr we can rank the proposed ride Proposed Ride Net Present Value Safety Engineer Time Required hours NPVHr See Answer

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MidWest Amusements is in the process of reviewing 10 proposalsfor new rides at its theme parks in cities scattered throughout theAmerican heartland. The company’s only experienced safety engineermust carefully review plans and monitor the construction of all newrides. However, she is only available to work on new rides for1,479 hours during the year. The net present values and the amountof safety engineer time required for the proposed rides are listedbelow:Proposed RideNet Present ValueSafetyEngineerTime Required(hours)Ride 1$930,000250Ride 21,152,000360Ride 3615,000300Ride 4593,250175Ride 5542,500250Ride 6506,250150Ride 7448,000112Ride 8687,800362Ride 9637,000182Ride 10418,320252Total$6,530,1202,393Required:1. Which of the proposed rides should the company build thisyear? (Note: The incremental profit of a long-term project such asconstructing a new ride is its net present value.) (You mayselect more than one answer. Single click the box with a check markfor correct answers and double click to empty the box for the wronganswers.)Ride 1Ride 6Ride 3Ride 9Ride 5Ride 4Ride 7Ride 10Ride 2Ride 82. What would be the total net present value of the rides builtunder your plan?Total$0

Proposed Ride	Net Present Value		SafetyEngineer Time Required (hours)
Ride 1	$	930,000	250
Ride 2		1,152,000	360
Ride 3		615,000	300
Ride 4		593,250	175
Ride 5		542,500	250
Ride 6		506,250	150
Ride 7		448,000	112
Ride 8		687,800	362
Ride 9		637,000	182
Ride 10		418,320	252
Total	$	6,530,120	2,393