You own an ice rink and are considering investing in a new high speed Zamboni...
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Accounting
You own an ice rink and are considering investing in a new high speed Zamboni (ice resurfacing machine). This would require an investment of $36,000 (the cost!). You are projecting that with the new Zamboni, additional related annual net cash inflows (with more available ice time for hockey leagues, skating parties, etc.) would be $8,000 annually. The Zamboni is expected to have a 6 year useful life with no salvage/residual value. (Percentage is 10%)
A. What is the expected simple (accounting) rate of return
B. What is the expected payback period?
C. What is the expected Net Present Value at your desired discount rate(10%)
D.What is the expected internal rate of return?
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