Water Planet is considering purchasing a water park in Atlanta, Georgia, for $1,910,000. The new facility will generate annual net cash inflows of $472,000 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 12% on investments of this nature.

Requirement 1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment.

Present Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 2% 3% 4% 5% 0.990 0.980 0.971 0.962 0.952 0.980 0.961 0.943 0.925 0.907 0.971 0.942 0.915 0.889 0.864 0.961 0.924 0.888 0.855 0.823 0.951 0.906 0.863 0.822 0.784 6% 0.943 0.890 0.840 0.792 0.747 7% 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 10% 12% 14% 0.917 0.909 0.893 0.877 0.842 0.826 0.797 0.769 0.772 0.751 0.712 0.675 0.708 0.683 0.636 0.592 0.650 0.621 0.567 0.519 15% 16% 18% 20% 0.870 0.862 0.847 0.833 0.756 0.743 0.718 0.694 0.658 0.641 0.609 0.579 0.572 0.552 0.516 0.482 0.497 0.476 0.437 0.402 Period 6 Period 7 Period 8 Period 9 Period 10 0.942 0.888 0.933 0.871 0.923 0.853 0.914 0.837 0.905 0.820 0.837 0.790 0.813 0.760 0.789 0.731 0.766 0.703 0.744 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.665 0.627 0.592 0.558 0.666 0.623 0.582 0.544 0.508 0.630 0.583 0.540 0.500 0.463 0.596 0.564 0.507 0.456 0.547 0.513 0.452 0.400 0.502 0.467 0.404 0.351 0.460 0.424 0.361 0.308 0.422 0.386 0.322 0.270 0.432 0.410 0.370 0.335 0.376 0.354 0.314 0.279 0.327 0.305 0.266 0.233 0.284 0.263 0.225 0.194 0.247 0.227 0.191 0.162 Period 11 Period 12 Period 13 Period 14 Period 15 0.896 0.804 0.722 0.650 0.585 0.887 0.788 0.701 0.625 0.557 0.879 0.773 0.681 0.601 0.530 0.870 0.758 0.661 0.577 | 0.505 0.861 0.743 0.642 0.555 0.481 0.527 0.497 0.469 0.442 0.417 0.475 0.444 0.415 0.388 0.362 0.429 0.397 0.368 0.340 0.315 0.388 0.350 0.287 0.356 0.319 0.257 0.326 0.290 0.229 0.299 0.263 0.205 0.275 0.239 0.183 0.237 0.208 0.182 0.160 0.140 0.215 0.1950.162 0.135 0.187 0.1680.137 0.112 0.163 0.145 0.116 0.093 0.141 0.125 0.099 0.078 0.123 0.108 0.084 0.065 Period 16 Period 17 Period 18 Period 19 Period 20 0.853 0.728 0.844 0.714 0.836 0.700 0.828 0.686 0.820 0.673 0.623 0.534 0.458 0.605 0.513 0.436 0.587 0.494 0.416 0.570 0.475 0.396 0.554 0.456 0.377 0.394 0.371 0.350 0.331 0.312 0.339 0.317 0.296 0.277 0.258 0.292 0.270 0.250 0.232 0.215 0.252 0.218 0.163 0.231 0.198 0.146 0.212 0.180 0.130 0.194 0.164 0.116 0.178 0.149 0.104 0.123 0.108 0.095 0.083 0.073 0.107 0.093 0.071 0.054 0.093 0.080 0.060 0.045 0.081 0.069 0.051 0.038 0.070 0.060 0.043 0.031 0.061 0.051 0.037 0.026 Period 21 0.811 0.660 0.538 0.439 0.359 Period 22 0.803 0.647 0.522 0.422 0.342 Period 23 0.795 0.634 0.507 0.4060.326 Period 24 0.788 0.622 0.492 0.390 0.310 Period 25 0.780 0.610 0.478 0.375 0.295 0.294 0.278 0.262 0.247 0.233 0.242 0.226 0.211 0.197 0.184 0.199 0.184 0.170 0.158 0.146 0.164 0.135 0.093 0.150 0.123 0.083 0.138 0.112 0.074 0.126 0.102 0.066 0.116 0.092 0.059 0.064 0.056 0.049 0.043 0.038 0.053 0.044 0.031 0.022 0.046 0.038 0.026 0.018 0.040 0.033 0.022 0.015 0.035 0.028 0.019 0.013 0.030 0.024 0.016 0.010 Present Value of Ordinary Annuity of $1 1% 4% Periods Period 1 Period 2 Period 3 Period 4 Period 5 0.990 1.970 2.941 3.902 4.853 2% 0.980 1.942 2.884 3.808 4.713 3% 0.971 1.913 2.829 3.717 4.580 5% 6% 7% 0.962 0.952 0.943 0.935 1.886 1.859 1.833 1.808 2.775 2.723 2.673 2.624 3.630 3.546 3.465 3.387 4.452 4.329 4.212 4.100 8% 9% 10% 0.926 0.917 0.909 1.783 | 1.759 1.736 2.577 2.531 2.487 3.312 3.240 3.170 3.993 3.890 3.791 12% 0.893 1.690 2.402 3.037 3.605 14% 0.877 1.647 2.322 2.914 3.433 15% 0.870 1.626 2.283 2.855 3.352 16% 0.862 1.605 2.246 2.798 3.274 18% 20% 0.847 0.833 1.566 1.528 2.174 2.106 2.690 2.589 3.127 2.991 Period 6 Period 7 Period 8 Period 9 Period 10 5.795 6.728 7.652 8.566 9.471 5.601 6.472 7.325 8.162 8.983 5.417 6.230 7.020 7.786 8.530 5.242 5.076 4.917 4.767 4.623 4.486 4.355 6.002 5.786 5.582 5.389 5.206 5.033 4.868 6.733 6.463 6.210 5.971 5.747 5.535 5.335 7.435 7.108 6.802 6.515 6.247 5.995 5.759 8.111 7.722 7.360 7.024 6.710 6.418 6.145 4.111 4.564 4.968 5.328 5.650 3.889 4.288 4.639 4.946 5.216 3.784 3.685 4.160 4.039 4.487 4.344 4.7724.607 5.019 4.833 3.498 3.326 3.812 3.605 4.078 3.837 4.303 4.031 4.494 4.192 Period 11 Period 12 Period 13 Period 14 Period 15 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 11.255 10.575 | 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 12.134 11.348 10.635 | 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 | 7.786 7.367 6.628 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 5.453 5.660 5.842 6.002 6.142 5.234 5.421 5.583 5.724 5.847 5.029 5.197 5.342 5.468 5.575 4.656 4.327 4.793 4.439 4.910 4.533 5.008 4.611 5.092 4.675 Period 16 Period 17 Period 18 Period 19 Period 20 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 17.226 15.678 14.32413.134 12.08511.158 10.336 9.604 8.950 8.365 | 7.366 18.046 | 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.265 6.373 6.467 6.550 6.623 5.954 6.047 6.128 6.198 6.259 5.669 5.749 5.818 5.877 5.929 5.1624.730 5.222 4.775 5.2734.812 5.316 4.844 5.353 4.870 Period 21 Period 22 Period 23 Period 24 Period 25 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 19.660 17.658 15.937 | 14.451 13.163 12.042 11.061 10.2019.442 | 8.772 7.645 20.456 18.292 16.444 14.857 13.489 12.303) 11.272 10.371 9.580 8.883 7.718 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 22.023 19.523 17.41315.622 14.094 12.783 11.654 10.675 9.8239.077 7.843 6.687 6.743 6.792 6.835 6.873 6.312 6.359 6.399 6.434 6.464 5.973 6.011 6.044 6.073 6.097 5.384 4.891 5.410 4.909 5.432 4.925 5.451 4.937 5.467 4.948 rulure Value 3% 4% 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 1.030 1.061 1.093 1.126 1.159 1.040 1.082 1.125 1.170 1.217 5% 6% 7% 8% 9% 10% 1.050 1.060 1.070 1.080 1.090 1.100 1.103 1.124 1.145 1.166 1.188 1.210 1.158 1.191 1.225 1.260 1.295 1.331 1.216 1.262 1.311 1.360 1.412 1.464 1.276 1.338 1.403 1.469 1.539 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 15% 1.140 1.150 1.300 1.323 1.482 1.521 1.689 1.749 1.925 | 2.011 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 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1.340 1.419 1.501 1.587 1.677 1.772 1.974 1.407 1.5041.606 1.714 1.828 1.949 2.211 1.477 1.594 1.718 1.851 1.993 2.144 2.476 1.551 1.689 1.838 1.999 2.172 2.358 2.773 1.629 1.791 1.967 2.159 2.367 2.594 3.106 2.1952.313 2.502 2.660 2.853 3.059 3.252 3.518 3.707 4.046 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 1.898 2.105 2.332 2.580 2.853 1.796 2.012 2.252 2.518 2.81 .138 1.886 2.133 2.410 2.720 3.066 3.452 1.980 2.261 2.579 | 2.937 3.342 3.798 2.079 2.397 | 2.759 3.172 3.642 4.177 3.479 .896 4.363 4.887 5.474 4.226 4.652 4.818 5.350 5.492 6.153 6.261 | 7.076 7.1388.137 Period 16 Period 17 Period 18 Period 19 Period 20 1.173 1.184 1.196 1.208 1.220 1.373 1.400 1.428 1.457 1.486 1.605 1.873 1.653 1.948 1.702 2.026 1.754 2.107 1.806 2.191 2.183 2.540 2.952 3.426 3.970 4.595 2.292 2.693 3.159 3.700 4.328 5.054 2.407 2.854 3.380 3.996 4.717 5.560 2.527 3.026 3.617 4.316 5.142 6.116 2.653 3.2073.870 4.661 5.6046.727 6.130 6.866 7.690 8.613 9.646 8.1379.358 9.276 10.76 10.58 12.38 12.06 14.23 13.74 16.37 Period 21 Period 22 Period 23 Period 24 Period 25 1.232 1.245 1.257 1.270 1.282 1.516 1.546 1.577 1.608 1.641 1.860 1.916 1.974 2.279 2.370 2.465 2.563 2.666 2.786 3.400 4.141 5.034 6.109 7.400 2.925 3.604 4.430 5.437 6.659 | 8.140 3.072 3.820 4.741 5.8717.258 8.954 225 5.072 7.91 9.850 3.386 4.292 5.427 6.848 8.623 10.83 10.80 12.10 13.55 15.18 17.00 15.67 18.82 17.86 21.64 20.36 24.89 23.21 26.46 32.92 2.094 Future Value of Ordinary Annuity of $1 3% 6% 1.000 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 2% 4% 5% 1.000 1.000 1.000 1.000 1.000 2.010 2.020 2.030 2.040 2.050 3.030 3.060 3.091 3.122 3.153 4.060 4.122 4.184 4.246 4.310 5.101 5.204 5.309 5.416 5.526 2.060 3.184 4.375 5.637 7% 8% 9% 10% 12% 14% 15% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.070 2.080 2.090 2.100 2.120 2.140 2.150 3.215 3.246 3.278 3.310 3.374 3.440 3.473 4.440 4.506 4.573 4.641 4.779 4.921 4.993 5.751 5.867 5.985 6.105 6.353 6.610 6.742 Period 6 Period 7 Period 8 Period 9 Period 10 6.152 6.308 6.468 6.633 6.802 6.975 7.1537.336 7.523 7.716 7.214 7.434 7.6627.898 8.142 8.394 8.654 8.923 9.200 9.487 8.286 8.583 8.892 9.214 9.549 9.897 10.260 10.64 11.03 11.44 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 10.46 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.1915.94 8.115 8.536 8.754 10.09 10.73 11.07 12.30 13.23 13.73 14.78 16.09 16.79 17.55 | 19.34 20.30 Period 11 Period 12 Period 13 Period 14 Period 15 11.57 12.17 12.81 13.49 14.21 14.97 12.68 13.41 14.19 15.03 | 15.92 16.87 13.81 14.68 15.62 16.63 17.71 18.88 14.95 | 15.97 | 17.09 | 18.29 | 19.60 21.02 16.10 17.29 18.60 20.02 21.58 23.28 15.78 16.65 17.56 18.53 20.65 23.04 24.35 17.89 18.98 20.14 21.38 24.13 27.27 29.00 20.14 21.50 22.95 | 24.52 28.03 32.09 34.35 22.55 24.21 26.02 27.98 32.39 37.58 40.50 25.13 27.15 29.3631.77 37.28 43.84 47.58 Period 16 Period 17 Period 18 Period 19 Period 20 17.26 18.64 20.16 21.82 23.66 25.67 18.43 20.01 21.76 23.70 25.84 28.21 19.61 21.41 23.41 25.65 28.13 30.91 20.81 22.84 25.12 27.67 30.54 33.76 22.02 24.30 26.87 29.7833.07 36.79 27.89 30.32 33.00 35.95 42.75 50.98 55.72 30.84 33.75 36.97 40.54 48.88 59.12 65.08 34.00 37.45 41.30 45.60 55.75 68.39 75.84 37.38 41.45 46.02 51.16 63.44 78.97 88.21 41.00 45.76 51.16 57.28 72.05 91.02 | 102.4 Period 21 Period 22 Period 23 Period 24 Period 25 23.24 25.78 28.68 31.97 35.72 24.47 27.30 30.54 34.25 38.51 25.72 28.85 32.45 36.62 41.43 26.97 30.42 34.43 39.08 44.50 28.24 32.03 36.46 41.65 47.73 39.99 43.39 47.00 50.82 54.86 44.87 50.42 56.76 64.00 49.01 55.46 62.87 71.40 53.44 60.89 69.53 79.54 58.18 66.76 76.79 88.50 63.25 73.11 84.70 98.35 81.70 92.50 104.6 118.2 133.3 104.8 118.8 120.4 137.6 138.3 159.3 158.7 | 184.2 181.9 212.8 First, determine the formula and calculate payback. (Round your answer to one decimal place, X.X.) Payback . years Next, determine the formula and calculate the accounting rate of return (ARR). (Round the percentage to the nearest tenth percent, X.X%.) ARR % Calculate the net present value (NPV). (Enter any factor amounts to three decimal places, X.XXX.) Net Cash Annuity PV Factor Present Years Inflow (i=12%, n=8) Value 1-8 Present value of annuity 0 Investment Net present value of the investment The IRR (internal rate of return) is between Finally, determine the formula and calculate the profitability index. (Round your answer to two decimal places, X.XX.) - = Profitability index Requirement 2. Recommend whether the company should invest in this project. Recommendation: Water Planet invest in the project because the payback period is the operating life, the NPV is the profitability index is one, and the ARR and IRR are the company's required rate of return. 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