Using payback, NPV, and profitability index to make capital investment decisions
Splash City is considering purchasing a water park in Omaha, Nebraska, for $1,910,000. The new facility will generate
annual net cash inflows of $487,000 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, and its stockholders
demand an annual return of 10% on investments of this nature.
	Requirements
1.)	Compute the payback, the NPV, and the profitability index of this investment.
2.)	Recommend whether the company should invest in this project.