Hazy Days Pool Park_Net present value

$6.00

Description

Hazy Days Pool Park must
replace its pool pump at a cost of $180,000. The pump has a useful life of 10
years with an $8,000 salvage value. The required rate of return is 12 percent.
The replacement is expected to generate additional day passes to the pool park
amounting to profits of $20,000 and cash flows of $37,200 per year. Should Hazy
Days invest in the new pool pump if the NPV approach is used?

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