Rapid wave is considering purchasing a water park in Oakland, California, for $1,950,000. The new facility will generate annual net cash inflows of $490,000 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. It's owners want payback in less than five years and an ARR of 10% or more . Management uses 14% hurdle rate on investments of this nature.

1. Compute the payback period, the ARR, NPV and the approximate IRR of this investment.

The payback period is ___ years

The ARR is ___%

Net present value $____

The IRR is between ______

2. Recommend whether the company should invest in this project.