AdventureParks Ltd is evaluating the construction of a new theme park. The theme park would...
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AdventureParks Ltd is evaluating the construction of a new theme park. The theme park would cost $497 million, but would operate for 20 years. AdvertureParks expects annual cash flows from operating the theme park to be $69.1 million and its cost of capital is 11.8% . a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should AdventureParks go ahead with the purchase? d. How far off could AdventureParks' cost of capital estimate be before your purchase decision would change?
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