The Owner of an Amusement Park Is Considering Installing a New

question 96

Essay

The owner of an amusement park is considering installing a new ride.The ride would cost $20,000,produce a net cash flow of $2,500 annually,and last for nine years.
a.Assuming an interest rate of 10 percent,what is the present value of the net cash flows expected from the ride? Use future value and/or present value tables in calculating your answer.Round amounts to the nearest dollar.
b.Should the ride be purchased?

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Definitions:

Liability to Customers

The legal responsibility of a business to compensate customers for harm, loss, or injury resulting from its products or services.

Unfair Business Practices

Business practices designed to take advantage of consumer inexperience or ignorance.

Exemplary Damages

Exemplary damages, also known as punitive damages, are awarded in a lawsuit as a punishment to the defendant and to deter others from engaging in similar conduct.

Rescind Agreement

The legal act of unilaterally canceling or terminating a contract by one of the parties involved, effectively restoring the parties to their state before the contract was signed.