Magic corporation an amusement park is considering a

Reference no: EM13583773

Magic Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $161,102 and have an estimated useful life of 7 years. It will be sold for $74,000 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $25,800. The company's borrowing rate is 8%. Its cost of capital is 10%.

Calculate the net present value of this project to the company and determine whether the project is acceptable. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value to 0 decimal places, e.g. 125. Round Discount Factor to 5 decimal places, e.g. 0.17986.)

Net present value

The project isis not acceptable.

Reference no: EM13583773

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