Susie Reed, owner of the Wild Life, an amusement park, is contemplating purchasing a new roller coaster/water combination rider for $1,500,000. She has determined that it would increase park revenues by $300,000 a year because of its originality, but it will cost approximately $70,000 a year to operate.

Assume a 15 percent discount rate and a ten year life for the equipment.

Required:

Use the NPV model to determine if the equipment should be purchased.