Splash World is considering purchasing a water park in Atlanta, Georgia, for $1,900,000. The new...
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Splash World is considering purchasing a water park in Atlanta, Georgia, for $1,900,000. The new facility will generate annual net cash inflows of $472,000 for eight years. Engineers estimate that the facility will $ 234,500 $ 950,000 24.7 % Calculate the net present value (NPV). (Enter any factor amounts to three decimal places, X.XXX.) Net Cash Annuity PV Factor Present Years Inflow (i=12%, n=8) Value 1 - 8 Present value of annuity $ 472,000 4.968 $ 2,344,896 0 Investment (1,900,000) Net present value of the investment $ 444,896 The IRR (internal rate of return) is between 18-20% Finally, determine the formula and calculate the profitability index. (Round your answer to two decimal places, XXX.) Present value of net cash inflows Initial investment = Profitability index $ 2,344,896 1,900,000 1.23 Requirement 2. Recommend whether the company should invest in this project. Recommendation: Splash World should invest in the project because the payback period is greater than the operating life, the NPV is positive the profitability index is greater than one, and the ARR and IRR are greater than | the company's required rate of return. Clear all Final check Help me solve this Demodocs example Get more help
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