Thunder Corporation, an amusement park, is considering a capitalinvestment in a new exhibit. The...

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Accounting

Thunder Corporation, an amusement park, is considering a capitalinvestment in a new exhibit. The exhibit would cost $147,150 andhave an estimated useful life of 6 years. It can be sold for$68,000 at the end of that time. (Amusement parks need to rotateexhibits to keep people interested.) It is expected to increase netannual cash flows by $24,000. 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 anddetermine whether the project is acceptable. (If the net presentvalue is negative, use either a negative sign preceding the numbereg -45 or parentheses eg (45). For calculation purposes, use 5decimal places as displayed in the factor table provided. Roundpresent value answer to 0 decimal places, e.g. 125.)
Net present value:
The project:

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3.6 Ratings (631 Votes)

Years		Net cash Inflow	PV Factor 10%	Present value
1	Net Cash flows Save	24,000	0.90909	21,818
2	Net Cash flows Save	24,000	0.82645	19,835
3	Net Cash flows Save	24,000	0.75131	18,031
4	Net Cash flows Save	24,000	0.68301	16,392
5	Net Cash flows Save	24,000	0.62092	14,902
6	Net Cash flows Save	24,000	0.56447	13,547
6	Salvage value	68,000	0.56447	38,384
Total PV of Inflows				1,42,910
0	Initial Investment			1,47,150
Net Present value on the Project				-4,240
the project is not acceptable

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In: AccountingThunder Corporation, an amusement park, is considering a capitalinvestment in a new exhibit. The exhibit...Thunder Corporation, an amusement park, is considering a capitalinvestment in a new exhibit. The exhibit would cost $147,150 andhave an estimated useful life of 6 years. It can be sold for$68,000 at the end of that time. (Amusement parks need to rotateexhibits to keep people interested.) It is expected to increase netannual cash flows by $24,000. 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 anddetermine whether the project is acceptable. (If the net presentvalue is negative, use either a negative sign preceding the numbereg -45 or parentheses eg (45). For calculation purposes, use 5decimal places as displayed in the factor table provided. Roundpresent value answer to 0 decimal places, e.g. 125.)Net present value:The project: