Pacific Developers Inc., in Surrey, B.C., is considering purchasing a water park for $1,850,000. Top managers of Pacific Developers believe the new facility will generate annual net cash inflows of $385,000 for eight years. Architects and engineers estimate that the facility will remain useful for eight years and have a residual value of $600,000. The company's shareholders demand an annual return of 16% on investment of this nature. What is the NPV of this opportunity? A) $2,595 B $4,856 C) $5,286 D $7,882
Pacific Developers Inc., in Surrey, B.C., is considering purchasing a water park for $1,850,000. Top managers of Pacific Developers believe the new facility will generate annual net cash inflows of $385,000 for eight years. Architects and engineers estimate that the facility will remain useful for eight years and have a residual value of $600,000. The company's shareholders demand an annual return of 16% on investment of this nature. What is the NPV of this opportunity? A) $2,595 B $4,856 C) $5,286 D $7,882
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Transcribed Image Text:Pacific Developers Inc., in Surrey, B.C., is considering purchasing a water park for $1,850,000. Top managers of Pacific
Developers believe the new facility will generate annual net cash inflows of $385,000 for eight years. Architects and
engineers estimate that the facility will remain useful for eight years and have a residual value of $600,000. The company's
shareholders demand an annual return of 16% on investment of this nature.
What is the NPV of this opportunity?
A) $2,595
B $4,856
C) $5,286
D
$7,882
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