Rapid Wave is considering purchasing a water park in San Antonio, Texas, for $2,300,000. The new facility will generate annual net cash inflows of $515,000 for ten years. Engineers estimate that the facility will remain useful for ten 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% or 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 future value annuity table.) Read the requirements. (Click the icon to view the present value table.) (Click the icon to view the future value table.) 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 4.5 (Round the percentage to the nearest tenth percent.) The ARR (accounting rate of return) is 12.4 %. (Round your answer to the nearest whole dollar.) Net present value Reference Present Value of Annuity of $1 - ac e Periods Period 1 0.990 Period 2 1.970 Period 3 Period 4 Period 5 Period 6 1% 2% 3% 4% 0.980 0.971 0.962 1.942 1.913 1.886 5% 0.952 1.859 2.941 3.902 2.884 2.829 2.775 3.808 3.717 3.630 2.723 6% 8% 10% 12% 0.943 0.926 0.909 0.893 1.833 1.783 1.736 1.690 2.673 2.577 2.487 2.402 14% 0.877 16% 18% 0.862 20% 0.847 0.833 1.647 1.605 1.566 1.528 2.322 2.246 2.174 2.106 re 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 7.325 7.020 6.733 Period 8 7.652 Period 9 8.566 8.162 7.786 7.435 Period 10 9.471 8.983 8.530 8.111 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.463 6.210 5.747 5.335 4.968 4.639 3.685 3.498 3.326 4.039 3.605 3.812 4.344 4.078 3.837 7.108 6.802 6.247 5.759 5.328 7.722 7.360 6.710 6.145 5.650 4.946 4.607 4.303 4.031 5.216 4.833 4.494 4.192 5.453 5.029 4.656 4.327 7.536 6.814 6.194 5.660 5.197 4.793 4.439 7.904 7.103 6.424 5.842 5.342 4.910 4.533 6.002 5.468 5.008 4.611 6.142 5.575 5.092 4.675 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 6.873 6.623 5.929 5.353 4.870 6.097 5.467 4.948 7.003 6.177 5.517 4.979 7.105 6.233 5.548 4.997 Requirements 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.) 2. Recommend whether the company should invest in this project. Print Done