Essay
The owner of an amusement park is considering installing a new ride. The ride would cost $10,000, produce a net cash flow of $1,575 annually, and last for nine years.
a. Assuming an interest rate of 10 percent, what is the present value of the net cash flows expected from the ride (amounts rounded)? Use future value and/or present value tables in calculating your answer.
b. Should the ride be purchased?
Correct Answer:
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a. $9,070 [($1,575 
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