Neville Corporation, an amusement park, is considering a capital investment in a

Question

Neville Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $174,777 and have an estimated useful life of 9 years. It will be sold for $69,200 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $25,600. The company's borrowing rate is 8%. Its cost of capital is 10%. Calculate the net present value of this project to the company. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round computations and final answer for present value to 0 decimal places, e.g. 125. Round computations for Discount Factor to 5 decimal places.)

If you could please show this using a financial calculator! Thank you. I know we should be using the Cfj key for this problem.

Explanation / Answer

T0 investment=136000 NPV=136000/79247+58988)*10% =2234

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