Ocean World is considering purchasing a water park in Charlotte,North Carolina, for $2,100,000. The new facility will generateannual net cash inflows of $535,000 for eight years. Engineersestimate that the facility will remain useful for eight years andhave no residual value. The company uses straight-linedepreciation. Its owners want payback in less than five years andan ARR of 10% or more. Management uses a 12% hurdle rate oninvestments of this nature. Requirements Requirement 1. Compute thepayback period, the ARR, the NPV, and the approximate IRR of thisinvestment Requirement 2. Recommend whether the company shouldinvest in this project
