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In: Accounting
Ocean World is considering purchasing a water park in Charlotte, North Carolina, for $2,100,000. The new...
Ocean World is considering purchasing a water park in Charlotte, North Carolina, for $2,100,000. The new facility will generate annual net cash inflows of $535,000 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. Its owners want payback in less than five years and an ARR of 10% or more. Management uses a 12% hurdle rate on investments of this nature. Requirements Requirement 1. Compute the payback period, the ARR, the NPV, and the approximate IRR of this investment Requirement 2. Recommend whether the company should invest in this project
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ekkarill92 answered 8 months agoRelated Solutions
Water Planet is considering purchasing a water park in Miami, Florida, for $ 2,100,000. The new...
Water Planet is considering purchasing a water park in Miami,
Florida, for $ 2,100,000. The new facility will generate annual
net cash inflows of $ 535,000 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. Its
owners want payback in less than five years and an ARR of 10% or
more. Management uses a 12% hurdle rate on investments of this
nature.
.
Requirement 1....
Water World is considering purchasing a water park in Atlanta, Georgia, for $1,950,000. The new facility...
Water World
is considering purchasing a water park in Atlanta, Georgia,
for
$1,950,000.
The new facility will generate annual net cash inflows of
$481,000
for
eighteight
years. Engineers estimate that the facility will remain useful
for
eighteight
years and have no residual value. The company uses
straight-line depreciation, and its stockholders demand an annual
return of
1010%
on investments of this nature.
LOADING...
(Click the icon to view the Present Value of $1
table.)
LOADING...
(Click the icon to view...
Water WorldWater World is considering purchasing a water park in Atlanta, Georgia, for $1,950,000. The new...
Water WorldWater World
is considering purchasing a water park in Atlanta, Georgia,
for
$1,950,000.
The new facility will generate annual net cash inflows of
$481,000
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.
LOADING...
(Click the icon to view the Present Value of $1
table.)
LOADING...
(Click the icon to...
The Ocean City water park is considering the purchase of a new log flume ride. The...
The Ocean City water park is considering the purchase of a new
log flume ride. The cost to
purchase the equipment is $5,000,000, and it will cost an
additional $380,000 to have it installed. The equipment has an
expected life of six years, and it will be depreciated using a
MACRS 7-year class life. Management expects to run about 150 rides
per day, with each ride averaging 25 riders. The season will last
for 120 days per year. In the...
The Park Manager at Fort Fisher State Park in North Carolina believes the typical park visitor...
The Park Manager at Fort Fisher State Park in North Carolina
believes the typical park visitor spends at least 90 minutes in the
park during summer months. A sample of 18 visitors during the
summer months of 2011 revealed the mean time in the park was 96
minutes with a standard deviation of 12 minutes. At the 0.01
significance level, is it reasonable to conclude that the mean time
in the park is greater than 90 minutes? What is alpha?
Assume the Finch family of Charlotte, North Carolina, purchased their home in 1966 for $50,000. Since...
Assume the Finch family of Charlotte, North Carolina, purchased
their home in 1966 for $50,000. Since then, comparable homes in
their neighborhood have most recently sold for $150,000. The cost
to replace the home would be $169,500. It is estimated that the
house is one third (1/3) depreciated. The Finch’s have a $135,600
(Coverage A) Homeowners policy in force, similar to the policy
shown in the Appendix. Answer the following questions as if each
question were a separate event. (Assume...
For a recent year, the mean fare to fly from Charlotte, North Carolina to Chicago Illinois,...
For a recent year, the mean fare to fly from Charlotte, North
Carolina to Chicago Illinois, on a discount ticket was $290. A
random sample of 12 round trip discount fares on this route last
month shows: 286 290 285 291 287 275 262 289 274 276 297 262 At the
0.01 significance level, can we conclude that the mean fare has
decreased? What is the p value?
1. State the Null and Alternate hypothesis:
2. State the test statistic:...
For a recent year, the mean fare to fly from Charlotte, North Carolina to Chicago Illinois,...
For a recent year, the mean fare to fly from Charlotte, North
Carolina to Chicago Illinois, on a discount ticket was $290. A
random sample of 12 round trip discount fares on this route last
month shows:
286 290 285 291 287 275 262 289 274 276 297
262
At the 0.01 significance level, can we conclude that the mean
fare has decreased? What is the p value?
1. State the Null and Alternate hypothesis:
2. State the test statistic:...
For a recent year, the mean fare to fly from Charlotte, North Carolina to Chicago Illinois,...
For a recent year, the mean fare to fly from Charlotte, North
Carolina to Chicago Illinois, on a discount ticket was $290. A
random sample of 12 round trip discount fares on this route last
month shows:
286
290
285
291
287
275
262
289
274
276
297
262
At the 0.01 significance level, can we conclude that the mean
fare has decreased? What is the p value?
State the Null and Alternate hypothesis:
State the test statistic:
State the...
Problem 2: For a recent year, the mean fare to fly from Charlotte, North Carolina to...
Problem 2:
For a recent year, the mean fare to fly from Charlotte, North
Carolina to Chicago Illinois, on a discount ticket was $290. A
random sample of 12 round trip discount fares on this route last
month shows:
286
290
285
291
287
275
262
289
274
276
297
262
At the 0.01 significance level, can we conclude that the mean
fare has decreased? What is the p value?
State the Null and Alternate hypothesis:
State the test statistic:...
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