Wet and Wild Theme Park Company is planning a new wate ride adventure. The company is in the process of analyzing the dcodnstruction of a new ride. Informaiton on the proposal is provided below. Assume there is no recovery of working capital.

initial investment :

asset $160,000

working capital $32,000

operations (per year for 4 years)

cash receipts $160,000

cah expenditures $88,000

disinvestment:

salvage value of ride (existing) $16,000

discount rate 20 %

1. initial investment 2. cash inflow for each additional year 3. total cash inflow 4. net present value 5. what is profitability index 6. should the company construct the new ride? explain