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Water Country is considering purchasing a water park in Atlanta, Georgia, for $1,850,000. The new facility will generate annual net cash inflows of $462,000 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, and its stockholders demand an annual return of 12% on investments of this nature. (Click the icon to view the Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the Requirement 1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment. First, determine the formula and calculate payback. (Round your answer to one decimal place, X.X.) Next, determine the formula and calculate the accounting rate of return (ARR). (Round the percentage to the nearest tenth percent, X.X%.) Calculate the net present value (NPV). (Enter any factor amounts to three decimal places, X.XXX.) The IRR (internal rate of return) is between The IRR (internal rate of return) is between Finally, determine the formula and calculate the profitability index. (Round your answer to two decimal places, X. XX.) Requirement 2. Recommend whether the company should invest in this project. Recommendation: Water Country invest in the project because the payback period is the operating life, the NPV is , the profitability index is one, and the ARR and IRR are the company's required rate of return. Requirement 1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this First, determine the formula and calculate payback. (Round your answer to one decimal place, X. X.) factor amounts to three decimal places, XX.) Next, determine the formula and calculate the accounting rate of return (ARR). (Round the percentage tenth percent, X.X\%.) actor amounts to three decimal places, X.XX.) The IRR (internal rate of return) is between Finally, determine the formula and calculate x. (Round your answer to th Requirement 2. Recommend whether the c 1416% st in this project. Recommendation: Water Country 1618% ect because the payback peri operating life, the NPV is , the pre the company's required rate The IRR (internal rate of return) is between Finally, determine the formula and calculate the profitability index. (Round your answer to two decimal places ry should invest in this project. est in the project because the payback period is ty index is one, and the ARR and IRR are m. Finally, determine the formula and ity index. (Round your answer to two decir should Requirement 2. Recommend whe shoud not uld invest in this project. Recommendation: Water Country invest in the project because the payback period is operating life, the NPV is , the profitability index is one, and the ARR and IR the company's required rate of return. ermine the formula and calculate the profitability index. (Round your answer to two decir greater than nent 2. Recommend whet endation: Water Country less than g life, the NPV is , the profitability index is the company's required rate of return. Finaily, determine the form in and maniolntn the profitability index. (Round your answer to two negative Requirement 2. Recomm Recommendation: Water positive ppany should invest in this project. invest in the project because the payback period operating life, the NPV is the profitability index is the company's required rate of return. Finally, determine the formula and calculate the profitability ind in. in ...nd ..... .m....or to two decimal place Requirement 2. Recommend whether the company should in greater than Recommendation: Water Country operating life, the NPV is invest in the pi the profitability index is the company's required rate of return. The IRR (internal rate of return) is between Finally, determine the formula and calculate the profitability index. (Round your ansv I greater than mend whether the company should invest in this project. the company's required rate of return

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