River Wild is considering purchasing a water park in Charleston, South Carolina, for $1,950,000. The new facility will generate annual net cash inflows of $500,000 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. Its owners want payback in less than five years and an ARR of 10% 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 present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) Read the requirements. 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 (Round the percentage to the nearest tenth percent.) The ARR (accounting rate of return) is %. (Round your answer to the nearest whole dollar.) Net present value The IRR (internal rate of return) is between Requirement 2. Recommend whether the company should invest in this project. Recommendation: Periods Period 1 Period 2 Period 3 Period 4 Period 5 Present Value of Annuity of $1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 1.970 1.942 | 1.913 1.886 1.859 1.833 1.783 1.736 1.6901.647 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.4022.322 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 16% 0.862 1.605 2.246 2.798 3.274 18% 0.847 1.566 2.174 2.690 3.127 20% 0.833 1.528 2.106 2.589 2.991 Period 6 5.795 5.601 5.417 5.2425.076 4.917 4.623 4.355 4.111 3.889 3.685 Period 7 6.728 6.472 6.230 6.0025.786 5.5825.206 4.868 4.564 4.288 4.039 Period 8 7.652 7.325 7.020 6.7336.463 6.210 5.747 5.335 4.968 4.639 4.344 Period 9 8.566 8.1627.786 7.435 7.108 6.8026.247 5.759 5.328 4.946 4.607 Period 100 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 4.833 3.498 3.812 4.078 4.303 4.494 3.326 3.605 3.837 4.031 4.192 Period 1110.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 Period 13) 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 5.342 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 5.468 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 5.575 Period 20 18.046 16.351 14.877 13.590 12.462 | 11.470 9.818 8.514 7.469 6.623 5.929 Period 25 22.023 19.523 17.41315.622 14.094 | 12.783 10.675 9.077 7.8436.873 6.097 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 | 7.003 6.177 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.7798.244 7.105 6.233 4.656 4.793 4.910 5.008 5.092 4.327 4.439 4.533 4.611 4.675 5.353 5.467 5.517 5.548 4.870 4.948 4.979 4.997 Future Value of Annuity of $1 14% Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 5% 1.000 2.050 3.153 4.310 5.526 6% 1.000 2.060 3.184 4.375 5.637 8% 1.000 2.080 3.246 4.506 5.867 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.066 6.877 18% 1.000 2.180 3.572 5.215 7.154 20% 1.000 2.200 3.640 5.368 7.442 Period 6 6.152 6.308 6.468 6.633 6.802 6.975 Period 7 7.214 7.434 7.662 7.898 8.142 8.394 Period 8 8.286 8.583 8.892 9.214 9.549 9.897 Period 9 9.369 9.755 10.159 10.583 11.027 11.491 Period 10 10.462 10.950 11.464 12.006 12.578 13.181 7.336 7.716 8.115 8.923 9.487 10.089 10.637 11.436 12.300 12.488 13.579 14.776 14.48715.937 17.549 8.536 10.730 13.233 16.085 19.337 8.977 11.414 14.240 17.519 21.321 9.442 12.142 15.327 19.086 23.521 9.930 12.916 16.499 20.799 25.959 Period 11 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 Period 12 12.683 13.412 14.192 15.02615.917 16.870 18.977 | 21.384 24.133 27.271 30.850 34.931 39.581 Period 1313.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 | 28.029 32.089 36.786 42.219 48.497 Period 14 | 14.94715.974 17.086 18.292 19.599 21.015 24.215 | 27.975 32.393 37.581 43.672 50.818 59.196 Period 15 16.097 17.29318.599 20.024 21.579 23.276 27.152 31.772 37.280 43.842 51.660 60.965 72.035 Period 20 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 | 72.052 91.025 115.380 146.628 186.688 Period 25 28.243 32.03036.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 Period 30 34.785 40.568 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 1,181.882 Period 40 48.886 60.402 75.401 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757|4,163.213 7,343.858 Present Value of $1 Periods 1% 2% 3% 4% Period 1 0.990 0.980 0.971 0.962 Period 2 0.980 0.961 0.943 0.925 Period 3 0.971 0.942 0.915 0.889 Period 4 0.961 0.924 0.888 0.855 Period 5 0.951 0.906 0.863 0.822 Period 6 0.9420.888 0.837 0.790 Period 7 0.933 0.871 0.813 0.760 Period 8 0.923 0.853 0.789 0.731 Period 9 0.914 0.837 0.766 0.703 Period 10 0.905 0.820 0.744 0.676 5% 0.952 0.907 0.864 0.823 0.784 6% 0.943 0.890 0.840 0.792 0.747 8% 0.926 0.857 0.794 0.735 0.681 10% 12% 14% 0.909 0.893 0.877 0.826 0.797 0.769 0.751 0.712 0.675 0.683 0.636 0.592 0.621 0.567 0.519 16% 18% 0.862 0.847 0.743 0.718 0.641 0.609 0.552 0.516 0.476 0.437 20% 0.833 0.694 0.579 0.482 0.402 0.746 0.711 0.677 0.645 0.614 0.705 0.630 0.665 0.583 0.627 0.540 0.592 0.500 0.558 0.463 0.564 0.507 0.456 0.513 0.452 0.400 0.467 0.404 0.351 0.424 0.361 0.308 0.386 0.322 0.270 0.410 0.370 0.354 0.314 0.305 0.266 0.263 0.225 0.227 0.191 0.335 0.279 0.233 0.194 0.162 Period 11 0.896 Period 12 0.887 Period 13 0.879 Period 14 0.870 Period 15 0.861 0.804 0.722 0.650 0.788 0.701 0.625 0.773 0.681 0.601 0.758 0.661 0.577 0.743 0.642 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.429 0.350 0.287 0.237 0.497 0.397 0.319 0.257 0.208 0.469 0.368 0.290 0.229 0.182 0.442 0.340 0.263 0.205 0.160 0.417 0.315 0.239 0.183 0.140 0.195 0.162 0.135 0.168 0.137 0.112 0.145 0.116 0.093 0.125 0.099 0.078 0.108 0.084 0.065 Period 20 0.820 0.673 0.554 0.456 Period 25 0.780 0.610 0.478 0.375 Period 30 0.742 0.552 0.412 0.308 Period 40 0.672 0.453 0.307 0.208 0.377 0.312 0.215 0.295 0.233 0.146 0.231 0.174 0.099 0.142 0.097 0.046 0.149 0.104 0.073 0.092 0.059 0.038 0.057 0.033 0.020 0.022 0.011 0.005 0.051 0.024 0.012 0.003 0.037 0.026 0.016 0.010 0.007 0.004 0.001 0.001 Future Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 8% 1.080 1.166 1.260 1.360 1.469 10% 1.100 1.210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 1.194 Period 6 Period 7 Period 8 Period 9 Period 10 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1.219 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1.340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.587 1.714 1.851 1.999 2.159 1.772 1.949 2.144 2.358 2.594 1.974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3.252 3.707 2.436 2.826 3.278 3.803 4.411 2.700 3.185 3.759 4.435 5.234 2.986 3.583 4.300 5.160 6.192 Period 11 Period 12 Period 13 Period 14 Period 15 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2.079 1.898 2.012 2.133 2.261 2.397 2.332 2.518 2.720 2.937 3.172 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 5.117 5.936 6.886 7.988 9.266 6.176 7.288 8.599 10.147 11.974 7.430 8.916 10.699 12.839 15.407 1.220 1.282 Period 20 Period 25 Period 30 Period 40 1.486 1.641 1.811 2.208 1.806 2.094 2.427 3.262 2.191 2.666 3.243 4.801 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 4.322 5.743 10.063 | 17.449 29.960 50.950 85.850 143.371 237.376 7.040 10.286 21.725 45.259 93.051 188.884378.721 750.3781,469.772 1.348 1.489