Question - Magic Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $129,006 and have an estimated useful life of 6 years. It will be sold for $66,300 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $21,600. The company's borrowing rate is 8%. Its cost of capital is 10%.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Calculate the net present value of this project to the company and determine whether the project is acceptable.