Question: Timo Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $136,000 and have an estimated

Timo Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $136,000 and have an estimated useful life of five years. The park will sell it for $65,000 at that time. (Amusement parks need to rotate rides to keep people interested.) The ride will be expected to increase net annual cash flows by $25,000. The company's borrowing rate is 8%. Its cost of capital is 10%. Calculate the net present value of this project to the company.

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