(Present Value Tables Are Needed -What Is the Net Present Value of the Wacky Water

question 112

Multiple Choice

(Present value tables are needed.) Corky's Amusement Park is evaluating the purchase of a new game to be located on its Midway.Corky's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game.Financial data about the two choices follows. $\begin{array}{|l|r|r|}\hline &\text { Wacky Water } & \text { Whack-A- } \\&\text { Race } & \text { Mole }\\\hline \text { Investment } & \$ 32,000 & \$ 22,000 \\\hline \text { Useful life } & 5 & 5 \\\hline \begin{array}{l}\text { Estimated annual net } \\\text { cash inflows for 8 years }\end{array} & \$ 9,000 & \$ 5,000\\\hline \text { Residual value } & \$ 2,000 & \$ 1,000 \\\hline \text { Depreciation method } & \text { straight-line } & \text { straight-line } \\\hline \text { Required rate of return } & 8 \% & 10 \%\\\hline\end{array}$

-What is the net present value of the Wacky Water Race game?

• A)$(5,299)
• B)$(3,045)
• C)$3,045
• D)$5,299

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