Question: The management of an amusement park is considering purchasing a new ride for $80,000 that would have a useful life of 10 years and a salvage value of 10,000. The ride would require annual operating costs of $32,000 throught its useful life. The company's discount rate is 9%. Management is unsure about how much additional ticket revenue the new ride would generate-particularyly since customrs pay a flat fee when they enter the park that entitles them to unlimited rides. Hopefully, the presence of the ride would attract new cusotmers.
How much additonal revenue would the ride have to generate per year to make it an attractive investment?