(the Scream Machine) at a theme park. Alternative A required a $300,000 investment, produced after-tax net annual revenue of $55,000, and had a negligible salvage value at the end of the 10-year planning horizon. Alternative B required a $450,000 investment, generated after-tax net annual revenue of $80,000, and also had a negligible salvage value at the end of the 10-year planning horizon. Based on an after-tax MARR of 10% and using a future worth analysis, which alternative, is the economic choice? O a) The do-nothing alternative will be selected. b) Alternative A and Future value will be calculated as follows: FWA =-$300,000(F/P, 10%,10)+$55,000(F/A, 10%,10)=- $300,000(2.59374)+$55,000(15.93742)=$98,436.10 c) None of the above d) Alternative B and Future value will be calculated as follows: FWB =-$450,000(F/P, 10%,10)+$80,000(F/A, 10%,10)=- $450,000(2.59374)+$80,000(15.93742)=$107,810.60

(the Scream Machine) at a theme park. Alternative A required a $300,000 investment, produced after-tax net annual revenue of $55,000, and had a negligible salvage value at the end of the 10-year planning horizon. Alternative B required a $450,000 investment, generated after-tax net annual revenue of $80,000, and also had a negligible salvage value at the end of the 10-year planning horizon. Based on an after-tax MARR of 10% and using a future worth analysis, which alternative, is the economic choice? O a) The do-nothing alternative will be selected. b) Alternative A and Future value will be calculated as follows: FWA =-$300,000(F/P, 10%,10)+$55,000(F/A, 10%,10)=- $300,000(2.59374)+$55,000(15.93742)=$98,436.10 c) None of the above d) Alternative B and Future value will be calculated as follows: FWB =-$450,000(F/P, 10%,10)+$80,000(F/A, 10%,10)=- $450,000(2.59374)+$80,000(15.93742)=$107,810.60

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 1fM

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