The Heritage Amusement Park would like to construct a new ride called the Sonic
ID: 2381767 • Letter: T
Question
The Heritage Amusement Park would like to construct a new ride called the Sonic Boom, which the park management feels would be very popular. The ride would cost $392,000 to construct, and it would have a 10% salvage value at the end of its 15-year useful life. The company estimates that the following annual costs and revenues would be associated with the ride: (Ignore income taxes):
52,000
74,480
1a.
Compute the pay back period associated with the new ride.
1b.
Assume that the Heritage Amusement Park will not construct a new ride unless the ride provides a payback period of 11 years or less. Does the Sonic Boom ride satisfy this requirement?
[The following information applies to the questions displayed below.]The Heritage Amusement Park would like to construct a new ride called the Sonic Boom, which the park management feels would be very popular. The ride would cost $392,000 to construct, and it would have a 10% salvage value at the end of its 15-year useful life. The company estimates that the following annual costs and revenues would be associated with the ride: (Ignore income taxes):
Explanation / Answer
The Heritage Amusement Park would like to construct a new ride called the Sonic
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