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A New Pinball Machine Will Generate $3,000 in Additional Revenue

question 15

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A new pinball machine will generate $3,000 in additional revenue each year for a game arcade.It has a useful life of three years.Assume that each year's income is received at the end of the year.If the interest rate is 10 percent (0.10) per year,,what is the present value of a new pinball machine to the arcade?


Definitions:

Warehouse

A facility for storing goods that are being prepared for distribution or sale.

Profitability Index

A financial tool that calculates the ratio of the present value of future cash flows to the initial investment cost, determining the attractiveness of an investment.

Payback Period

The duration it takes for an investment to recoup its initial costs through profits or savings.

Scrap Value

The estimated resale value of assets at the end of their useful life or the value of leftover materials after the production process.

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