Potential Investment 1 Description of Investment: Lease an old warehouse in North Salt Lake and turn it into a go-cart track with an arcade space.

Capital Needed $170,000 for arcade games. The games Potential Investment 1 Description of Investment: Lease an old warehouse in North Salt Lake and turn it into a go-cart track with an arcade space. Capital Needed $170,000 for arcade games. The games have an estimated useful of 5 years. $110,000 for working capital. The working capital will be released on 12/31/2033. $670,000 for go-cart equipment. This equipment has an estimated useful life of 10 ears with no salvage value. Other Expected Cash Flows Lease of warehouse: The total annual lease payment will be $85,000 for 10 years, according to the lease agreement. The lease payments are made at the end of each year, beginning 12/31/2024, and are treated as an expense. Sale of games: The arcade games purchased on 1/1/2024 will be sold on 12/31/2027 for $70,000. New games: New arcade games will be purchased on 12/31/2027. These games will have a cost of $220,000 and an expected useful life of 8 years. These games will be sold on 12/31/2033 for $62,000. Revenues: Sales for 2024: $421,000 Sales are expected to increase from each prior year as follows: 5% for 2025-2026 7% for 2027-2029 5% for 2030 4% for 2031 3% for 2032-2033 Expenses: Depreciation: MACRS used for tax purposes: 10-year for all arcade games; 7-year for go-cart equipment. Maintenance on games and go-cart equipment: $18,000 for 2024 (expected to increase 3% each

year) Wages: 2024 year wages = $139,600; salaries are expected to increase 2.5% each year Advertising: 2024-2028 = $25,000, 2029-2033 =

$15.000 Misc. Expenses: 3% of sales Reauired: Assume that Creative Solutions' cost of capital is 12% after tax and the tax rate is 32%. Assume the investments start on January 1, 2024 and will be terminated on December 31, 2033. In your recommendation, please prepare a comparison table showing the payback period, accounting rate of return, net present value, and internal rate of return. Provide a depreciation table and the net initial investment. Please show vour work!