Use the information below to answer the following question(s).
Corky's Amusement Park is evaluating the purchase of a new game to be located on its Midway. Corky's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows.

-The total present value of future cash inflows from the Whack-A-Mole game is closest to

Question

Use the information below to answer the following question(s).
Corky's Amusement Park is evaluating the purchase of a new game to be located on its Midway. Corky's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows.
 
-The total present value of future cash inflows from the Whack-A-Mole game is closest to

Quizplus · Accepted Answer

The present value of future cash inflows for Whack-A-Mole game is calculated as follows:
PV = (Annual net cash inflow / Discount rate) x (1 - 1 / (1 + Discount rate) ^ Number of years)
PV = (10,000 / 0.08) x (1 - 1 / (1 + 0.08) ^ 5)
PV = $19,576
Compared to Wacky Water Race game, Whack-A-Mole has a higher present value of future cash inflows, making it the better choice.

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