River Wild is considering purchasing a water park in Oakland, California, for $2,000,000. The new facility will generate annual net cash inflows of $510,000 for nine years. Engineers estimate that the facility will remain useful for nine 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. The management uses a 10% hurdle rate on investments of this nature.

Based on your reading, complete the given tasks:

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

o Recommend whether the company should invest in this projec