Water WorldWater World

is considering purchasing a water park in

Orlando comma FloridaOrlando, Florida,

for

$ 2 comma 100 comma 000$2,100,000.

The new facility will generate annual net cash inflows of

$ 490 comma 000$490,000

for

tenten

years. Engineers estimate that the facility will remain useful for

tenten

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

1010%

or more. Management uses a

1212%

hurdle rate on investments of this nature.