is considering purchasing a water park in Atlanta, Georgia, for

$ 1 comma 900 comma 000$1,900,000.

The new facility will generate annual net cash inflows of

$ 472 comma 000$472,000

for

eighteight

years. Engineers estimate that the facility will remain useful for

eighteight

years and have no residual value. The company uses straight-line depreciation, and its stockholders demand an annual return of

1010%

on investments of this nature.

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(Click the icon to view Future Value of Ordinary Annuity of $1 table.)Read the requirements

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.

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.)

Amount invested	/	Expected annual net cash inflow	=	Payback
$1,900,000	/	$472,000	=	4.0	years

Next, determine the formula and calculate the accounting rate of return (ARR). (Round the percentage to the nearest tenth percent, X.X%.)

	/		=	ARR
	/		=		%

Water Planet 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 remain useful for eight years and have no residual value. The company uses straight-line depreciation, and its stockholders demand an annual return of 10% 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.) Requirements (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) i Read the requirements. Requirement 1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment. 1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment. 2. Recommend whether the company should invest in this project. First, determine the formula and calculate payback. (Round your answer to one decimal place, X.X.) Amount invested / Expected annual net cash inflow Payback Print Done $ 1,900,000 472,000 4.0 years Next, determine the formula and calculate the accounting rate of return (ARR). (Round the percentage to the nearest tenth percent, X.X%.) = ARR =