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April 24, 2014

Homework Help: Business Finance

Posted by Francesca on Tuesday, July 3, 2012 at 6:20pm.

Neville Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $174,777 and have an estimated useful life of 9 years. It will be sold for $69,200 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $25,600. The company's borrowing rate is 8%. Its cost of capital is 10%. Calculate the net present value of this project to the company.

How would you calculate this using a financial calculator? (I use a HP 10B II). I know there is an easier process to solving this kind of problem. Since this uses annual cash flows we can use the CFj key. . .Thanks for any help!

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