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Splash World is considering purchasing a water park in San Antonio, Texas, for $$1,950,000.$ The new facility will generate annual net cash inflows of $$505,000$ 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 $12\%$ more. Management uses a $14\%$ hurdle rate on investments of this nature.

$($Click the icon to view the present value annuity table.$)$

$($Click the icon to view the present value table.$)$

$($Click the icon to view the future value annuity table.$)$

$($Click the icon to view the future value table.$)$

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Requirement $1.$ Compute the payback period, the ARR, the NPV$,$ and the approximate IRR of this investment. $($If you use the tables to compute the IRR, answer with the closest interest rate shown in the tables.$)($Round the payback period to one decimal place.$)$

The payback period $($in years$)$ is

Requirements

Compute the payback period, the ARR, the NPV$,$ and the approximate IRR of this investment. $($If you use the tables to compute the IRR, answer with the closest interest rate shown in the tables.$)$

Recommend whether the company should invest in this project.