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$0.25 What is the annual net cash inflow and how did you come up with answer???

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  • Due on Jul. 25, 2012
  • Asked on Jul 22, 2012 at 1:41:50PM
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acory001
acory001
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Q:

What is the annual net cash inflow and how did you come up with answer???

 

The Heritage Amusement Park would like to construct a new ride called the Sonic Boom, which the park management feels would be very popular. The ride would cost $450,000 to construct, and it would have a 10% salvage value at the end of its 15-year useful life. The company estimates that the following annual costs and revenues would be associated with the ride: (Ignore income taxes):

  

 
   Ticket revenues       $ 250,000  
   Less operating expenses:            
      Maintenance $ 40,000        
      Salaries   90,000        
      Depreciation   27,000        
      Insurance  

30,000

        
 
     
   Total operating expenses         187,000  
       
   Net operating income       $

63,000