Estimate what would be annual costs and revenues

Reference no: EM13215042

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

Reference no: EM13215042

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