Magic Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would

Question:

Magic Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $136,000 and have an estimated useful life of 5 years. It will be sold for $65,000 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $25,000. The company’s borrowing rate is 8%. Its is 10%. Calculate the of this project to the company.

Net Present Value
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