Business, 24.05.2020 01:59 adenmoye0910

River Wild is considering purchasing a water park in Charleston, South Carolina, for $ 2,050,000. The new facility will generate annual net cash inflows of $ 520,000 for eight years. Engineers estimate that the facility will remain useful for eight years and have no residual value. The company uses straight-line depreciation. Its owners want payback in less than five years and an ARR of 10% or more. Management uses a 12% hurdle rate on investments of this nature.

Based on your reading, complete the given tasks:

1. Compute the payback period, the ARR, the NPV, and the approximate IRR of this investment.

2. Recommend whether the company should invest in this project.

Answers: 2

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River Wild is considering purchasing a water park in Charleston, South Carolina, for $ 2,050,000. Th...