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QUESTION 4: Adventure Parks Ltd is evaluating the construction of a new theme park. The theme park would cost $502 million, but would operate for

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QUESTION 4: Adventure Parks Ltd is evaluating the construction of a new theme park. The theme park would cost $502 million, but would operate for 20 years. Adyerture Parks expects annual cash flows from operating the theme park to be $70.3 million and its cost of capital is 12.1%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should Adventure Parks go ahead with the purchase? d. How far off could Adventure parks' cost of capital estimate be before your purchase decision would change? QUESTION 5

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