How much additional revenue would the ride have to generate

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The management of an amusement park is considering purchasing a new ride for $89,000 that would have a useful life of 10 years and a salvage value of $10,900. The ride would require annual operating costs of $36,500 throughout its useful life. The company's discount rate is 9%. Management is unsure about how much additional ticket revenue the new ride would generate-particularly since customers pay a flat fee when they enter the park that entitles them to unlimited rides. Hopefully, the presence of the ride would attract new customers.

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Problem 1: How much additional revenue would the ride have to generate per year to make it an attractive investment?

Reference no: EM132837321

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